Which of the following is the best example of market failure?
A. Alex and others in a community want a new outdoor soccer field and are willing to pay to use it, but no private business is willing to build it.
B. Lucian wants more video games but doesn't buy them because his willingness to pay is less than the equilibrium price in the market.
C. Kara's Kitten Shop won't sell more purebred cats because the equilibrium price in the market is less than it would cost her to provide more.
D. Government fixes the price of gasoline, resulting in a shortage.
Answer: A
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The figure above shows a local lawn cutting service's demand for labor curve when the price of cutting an acre of lawn is $50 per acre. How much labor will the firm hire if the market wage is $300 per day?
A) 0 workers B) 1 worker C) 2 workers D) 3 workers
Although the Federal Reserve had traditionally made discount loans only to commercial banks, in response to the financial crisis in 2008 the Fed made ________ eligible for discount loans as well
A) savings banks B) primary dealers C) the Treasury Department D) mortgage brokers
Which of the following macroeconomic variables is countercyclical?
A) Real interest rates B) Unemployment C) Money growth D) Consumption
Suppose that the marginal revenue product of labor is currently 40 and the marginal revenue product of capital is 30. If both inputs have the same cost, the firm should:
A. increase labor and reduce capital to meet the cost minimization condition. B. increase both labor and capital proportionally to meet the cost minimization condition. C. increase capital and reduce labor to meet the cost minimization condition. D. decrease both labor and capital proportionally to meet the cost minimization condition.