A competitive market economy is unlikely to provide an efficient quantity of some public goods because:
A. only the government has the vast resources necessary to produce public goods.
B. the nature of public goods makes it difficult for producers to withhold them from nonpaying consumers.
C. the technology involved in the production of public goods makes it difficult for private firms to produce them even though, once produced, they could be marketed efficiently.
D. private production of public goods generally results in a large amount of profit, which is difficult for a firm to effectively pay out to shareholders.
Answer: B
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An example of an explicit cost of production is: a. the cost of foregone labor earnings for an entrepreneur
b. the cost of flour for a baker. c. the foregone rent that could have been earned if land owned by a firm was not used as its parking lot. d. provided by none of the above.
Suppose that John can buy a savings bond for $500 that matures in ten years and pays John $1,000 with certainty. He is indifferent between this bond and another $500 bond that has some risk but on which the interest rate is 5% higher. How much, to the nearest penny, does the riskier bond pay in ten years?
a. $1,275.91 b. $1,422.63 c. $1,577.69 d. $1,631.17
If the U.S. government went from a budget deficit to a budget surplus then
a. the interest rate and the real exchange rate would increase. b. the interest rate and the real exchange rate would decrease. c. the interest rate would increase and the real exchange rate would decrease. d. the interest rate would decrease and the real exchange rate would increase.
If box C represents households, then box D represents _____
a. firms. b. resource markets. c. households. d. product markets. e. expenditures. check image at top