Figure 34.2 illustrates two labor supply curves. If in-kind payments become less available in this economy and marginal tax rates decrease significantly, we would expect a shift from
A. S2 to S1 and a movement up S1.
B. S2 to S1 only.
C. S1 to S2 only.
D. S1 to S2 and a movement up S2.
Answer: D
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Forms of free riding behavior
a. Always leads to underproduction b. Occur in both external cost and public goods cases c. Does not occur with common property resources, unlike public goods cases d. Occurs with private goods, public goods and common property resources
When demand is inelastic, a decrease in price increases total revenue
a. True b. False Indicate whether the statement is true or false
On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. On these days, electricity is
a. excludable, but nonrival in consumption. b. not excludable, but rival in consumption. c. excludable and rival in consumption. d. not excludable and nonrival in consumption.
Markets will underproduce goods that yield external benefits and overproduce those that generate external costs.
Answer the following statement true (T) or false (F)