If production of an item results in negative external costs, then
A. the market quantity is too low from society's point of view.
B. the market price is below the socially preferred price that reflects the external costs.
C. the market price is above the socially preferred price that reflects the external costs.
D. market forces will always correct the problem.
Answer: B
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Mary has decided that the she does not like Iowa and has decided to quit her job as a medical technician and move to Arizona. Mary's unemployment as she searches for a new job is best classified as
A) traveling. B) structural. C) frictional. D) distance. E) cyclical.
According to the BEA, in the second quarter of 2012 personal consumption expenditures grew by 1.7 percent, gross private domestic investment grew by 3.0 percent,
government expenditure on goods and services decreased by -0.9 percent, imports grew by 2.9%, and exports grew by 6.0%. Given these data, it is most likely that A) GDP growth was positive in the 2nd quarter. B) GDP growth was negative in the 2nd quarter. C) the economy hit a business cycle peak. D) the economy hit a business cycle trough.
If initially the money supply is $1 trillion, velocity is 5, the price level is 1, and real GDP is $5 trillion, an increase in the money supply to $2 trillion
A) increases real GDP to $10 trillion. B) causes velocity to fall to 2.5. C) increases the price level to 2. D) increases the price level to 2 and velocity to 10.
Which of the following would cause labor's share of national income to decrease?
A) labor productivity increases less rapidly than the real wage rate. B) labor productivity increases more rapidly than the real wage rate. C) labor productivity has increased at the same rate as the real wage rate. D) labor's share of national income is not affected by the relative growth rates of labor productivity and the real wage rate.