A market transaction causes an externality if someone
a. directly involved in the transaction receives uncompensated benefits or costs from it.
b. not directly involved in the transaction receives uncompensated benefits or costs from it.
c. directly involved in the transaction seeks legal assistance to ensure that the transaction is carried out.
d. not directly involved in the transaction interferes in it by imposing regulations or product standards.
b
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According to the Taylor rule, if inflation equals 4 percent and there is a recessionary gap equal to 4 percent of potential output, the Fed will set a real interest rate of ________ percent and a nominal interest rate of ________ percent.
A. 1; 4 B. 2; 4 C. 1; 5 D. 4; 4
What is meant by the present bias?
What will be an ideal response?
Which of the following is not part of an oligopolist's business strategy?
A) determining the amount of advertising a new product needs B) deciding the level of total output of a new product C) meeting worker health and safety standards required of all firms D) setting the product's price after considering what rivals will do
Which of the following statements is true?
a. To maximize profits, a firm must maximize total revenue. b. In long-run equilibrium, a competitive firm produces at the point of minimum average total cost. c. In the short-run, a perfectly competitive firm produces where total cost is minimum. d. In the short-run, a perfectly competitive firm will close down whenever price is less than average total cost.