There is a surplus in a market for a product when
A. demand is less than supply.
B. quantity demanded is less than quantity supplied.
C. the current price is lower than the equilibrium price.
D. quantity demanded is greater than quantity supplied.
Answer: B
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Suppose a paper mill earns $1,000,000 in profits when it pollutes a river, and it can abate pollution at a cost of $120,000. The effects of the pollution are confined to a single farmer who earns $400,000 if the water he uses from the river is clean, and $300,000 if it's polluted. Suppose there is no law preventing the firm from polluting the river. Which of the following describes an efficient outcome in this case?
A. The owner of the mill is unable to pay the farmer enough to secure his permission to pollute the river. B. The farmer is unable to pay the owner of the mill enough to get him to stop polluting. C. The owner of the mill pays the farmer $110,000 for his permission to pollute the river. D. The farmer pays the owner of the mill $90,000 to stop polluting.
The government provides public education because
A) public education is a public good. B) public education is non-rival and nonexclusive. C) private education is rival and exclusive. D) public education combats the negative externalities of private education. E) public education provides positive externalities.
Current account transactions are payments and gifts that are related to the purchase or sale of
A) financial instruments only. B) both goods and services. C) goods only. D) services only.
The long-term financing dimension of financial management deals with the selection, issuance, and management of long-term debt and equity.
a. true b. false