Why is society's marginal social benefit curve for a public good found by vertically summing individual marginal benefit curves and not by horizontal summation as is the case for private goods?
What will be an ideal response?
In the case of a private good, producers must supply one different item to all individuals who demand one; that is, if 10,000 pizzas are demanded, 10,000 must be produced. Horizontal summation tells how much in total is demanded at a certain price. Because public goods are nonrival, producers need only supply one unit in total to all individuals who demand one. Vertical summation tells how much society is willing to pay for each unit produced.
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The difference between the current account balance and net exports is
A) the capital account. B) net unilateral transfers plus net factor payments from abroad. C) adjustments in net foreign assets. D) income receipts from foreign assets.
Actual GDP will be below potential GDP:
a. when the economy is at full employment. b. during an economic boom. c. when resources are fully utilized. d. during a recession.
Why are there two different views on the effect of taxation on labor supply in the United States?
What will be an ideal response?
If the resources of an economy are being used inefficiently, it would be
a. possible to increase production of all goods simultaneously. b. possible to increase production of one good only if production decreased for the other goods. c. not possible to increase production of any good. d. not possible to increase economic growth. e. possible to increase production with no effort.