To find the optimal level of provision for a public good, the government must know
A. the price elasticity of demand of each buyer.
B. the supply curve of the government.
C. everyone's preferences.
D. the marginal revenue of selling the good.
Answer: C
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Refer to Figure 13-1. Ceteris paribus, an increase in households' expectations of their future income would be represented by a movement from
A) AD1 to AD2. B) AD2 to AD1. C) point A to point B. D) point B to point A.
Which of the following statements is TRUE?
A. During periods of inflation, nominal GDP increases more rapidly than does real GDP. B. Real values are expressed in current dollars. C. Increases in real GDP are evidence that the distribution of wealth is becoming more equal. D. Nominal values are expressed in constant dollars.
If a firm is forced to take external costs into account, it will
A) reduce production and charge a higher market price. B) increase production and charge a lower market price. C) reduce prices and hire more workers. D) reduce prices and hire fewer workers.
What is an externality?
What will be an ideal response?