Using Figure 4.2, suppose point C represents the optimal mix of public and private goods for a society. The market mechanism is likely to result in a mix of output represented by point
A. B because the market mechanism tends to overproduce public goods.
B. F because the market mechanism is inefficient.
C. D because the market mechanism tends to underproduce public goods.
D. C because the market mechanism is efficient.
Answer: C
You might also like to view...
Suppose the government's budget deficit increases by $500 billion. If there is no Ricardo-Barro effect, what occurs?
A) The supply of loanable funds curve shifts leftward, the real interest rate rises, and the quantity of loanable funds decreases. B) The supply of loanable funds curve shifts rightward, the real interest rate falls, and the quantity of loanable funds increases. C) The demand for loanable funds curve shifts rightward, the real interest rate rises, and the quantity of loanable funds increases. D) The demand for loanable funds curve shifts leftward, the real interest rate falls, and the quantity of loanable funds decreases. E) The supply of loanable funds curve shifts leftward, the real interest rate rises, and the quantity of loanable funds increases.
Sandra has been working as a software engineer for five years and Jack has been working as a software engineer for two years. Which of the following statements is true of Sandra and Jack?
A) Sandra is likely to earn lower wages than Jack. B) Sandra is likely to earn the same wage as Jack. C) Sandra is likely to be more productive at work than Jack. D) Sandra is likely to be equally productivity at work as Jack.
Refer to Figure 5-1. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does S2 represent?
A) the market supply curve reflecting marginal social cost B) the market supply curve reflecting implicit cost C) the market supply curve reflecting marginal private cost D) the market supply curve reflecting external cost
A warranty offered by a seller is one way to overcome: a. A warranty offered by a seller is one way to overcome:. b. a negative externality problem
c. an adverse selection problem. d. a free-rider problem.