If there are important spillover benefits from consumption of a good,
a. government should prohibit its production
b. taxes should be imposed on producers of the product.
c. the market demand curve for the good understates the value of the product to society and resources are therefore underallocated to its production.
d. the market demand curve for the good overstates the value of the product to society and resources are therefore overallocated to its production.
c
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The figure above shows the housing market in the city of Appleville. A rent ceiling of $650 per month is imposed. With the rent ceiling, the deadweight loss in the Appleville housing market is
A) zero. B) at least $15,000 per month. C) at most $7,500 per month. D) 300 units per month.
Nations would gain from trade if a(n) _________ exists
a. absolute advantage b. exchange rate c. specialization d. comparative advantage e. terms of trade
Suppose the money multiplier in the United States is 2.5. If the Fed wants to reduce the money supply by 1,000 it should:
A. sell government securities worth 400. B. buy government securities worth 400. C. sell government securities worth 250. D. buy government securities worth 250.
Federal income taxes are
A) about 20 percent of incomes regardless of the size of the household income B) paid almost exclusively by the top half of households C) are primarily paid by the bottom 99 percent of households because of tax avoidance by the top 1% D) are less important to federal revenue than are excise taxes