Private markets usually fail to provide lighthouses because
a. lighthouses cost too much to build relative to their benefits.
b. government intervention makes it hard for private lighthouse owners to compete in the market.
c. ship captains have incentives to use lighthouses without paying.
d. lighthouses are valued very little by ship captains these days.
c
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Comparing the AS-AD model and the Phillips curve, we see that
A) they both are graphed as a relationship between the rate of inflation and the unemployment rate. B) the AS-AD model uses the price level and the Phillips curve uses the rate of inflation. C) the AS-AD model is graphed as a relationship between the inflation rate and the rate of real GDP. D) the AS-AD model uses the price level and the Phillips curve uses real GDP. E) the Phillips curve is graphed as a relationship between the price level and the unemployment rate.
If the purchasing power of a dollar is greater than the purchasing power of the yen, purchasing power parity would predict that
A) in the short run, interest rates will move to equalize the purchasing power of the dollar and the yen. B) in the long run, exchange rates will move to equalize the purchasing power of the dollar and the yen. C) in the short run, exchange rates will move to equalize the purchasing power of the dollar and the yen. D) in the long run, interest rates will move to equalize the purchasing power of the dollar and the yen.
Assume a central bank follows a rule that requires it to take steps to keep the price level constant. If the price level fell because of a decrease in aggregate demand and an increase in aggregate supply that kept output unchanged, then
a. the central bank would have to decrease the money supply which would decrease output. b. the central bank would have to decrease the money supply which would increase output. c. the central bank would have to increase the money supply which would decrease output. d. the central bank would have to increase the money supply which would increase output.
Suppose that the only input used in the generation of solar energy is sunlight and has a zero cost. The average total cost of producing electricity is:
A. zero. B. equal to the marginal cost. C. equal to the average fixed cost. D. immeasurably high.