Which of the following is an example of a negative network externality?
A. Playing terrible music very loudly in your dorm room
B. Using a social media site like Facebook
C. Driving on a crowded highway during rush hour
D. Planting pretty flowers in front of one's house
Answer: C
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A monopolist is earning an economic profit. At the present output level, MR = $35 and MC = $30 . Which of the following should the firm do to increase profit?
a. raise output and lower price b. do not change price or output c. raise price and raise output d. raise price and lower output e. lower price and lower output
Marginal social cost includes what types of costs imposed on society?
a. total cost and marginal cost b. marginal resource cost and average total cost c. marginal external cost and marginal private cost d. marginal fixed cost and marginal variable cost
Explain how various components work together in the decision-making process of the free market system.
What will be an ideal response?
If the MPC = 0.75 for a particular person this means that:
A. they will spend 75 cents of each new dollar they get. B. if they receive $1 then they want to spend 25% of it. C. if they receive $1 they want to spend roughly 75%, but probably won't do so. D. they will spend 25 cents of the $1 and save 75 cents.