Answer the following questions true (T) or false (F)
1. In a market with positive externalities, the market equilibrium price will be greater than the efficient equilibrium price.
2. In a market with positive externalities, the market equilibrium quantity will be less than the efficient equilibrium quantity.
3. Vaccinations tend to result in a negative externality.
1. FALSE
2. TRUE
3. FALSE
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In the long-run ISLM model and with everything else held constant, the long-run effect of an expansionary monetary policy is to
A) increase real output and the interest rate. B) not change either real output or the interest rate. C) increase real output and leave the interest rate unchanged. D) increase the interest rate and leave real output unchanged.
Refer to the above payoff matrix for the profits (in $ millions) of two firms (A and B) making a decision to advertise or not. Which of the following is the outcome of the dominant strategy without cooperation?
A) Both firm A and firm B choose not to advertise. B) Both firm A and firm B choose to advertise. C) Firm A chooses to advertise while firm B chooses not to advertise. D) Firm A chooses not to advertise while firm B chooses to advertise.
In the graph above
A. D1 is more inelastic than D2. B. D2 is more inelastic than D1. C. D1 and D2 have the same elasticity. D. There is no way to tell whether D1 or D2 is more elastic.
An economy in which output has decreased and prices have decreased would suggest a:
A. decrease in short-run aggregate supply. B. increase in aggregate demand. C. increase in short-run aggregate supply. D. decrease in aggregate demand.