If a positive externality exists, __________ in order for the socially optimal output to be reached.
A. supply needs to decrease
B. demand needs to increase
C. demand needs to decrease
D. a and c
E. none of the above
Answer: B
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If an economy cannot produce more of one good without producing less of another good, this implies that which of the following has been achieved?
A) allocative efficiency B) minimum marginal cost C) PPF efficiency D) production efficiency E) maximum marginal benefit
A recession in another country the U.S. actively trades with would
A. increase U.S. net exports and increase aggregate demand. B. increase U.S. net exports and increase aggregate supply. C. reduce U.S. net exports and reduce aggregate demand. D. reduce U.S. net exports and increase aggregate
"Smokers are more likely to be murdered than nonsmokers." This statement is an example of:
A) the fallacy of unintended consequences. B) a positive economic statement. C) a normative economic statement. D) a value judgment.
Refer to the information provided in Figure 10.3 below to answer the question(s) that follow. 
Figure 10.3 Refer to Figure 10.3. The market wage is initially W1 and the firm is initially at Point B. Labor supply increases from S1 to S0. The firm?s MRPL curve will shift from MRPL at K2 to MRPL at K1 because
A. the firm is no longer maximizing profits. B. the output effect led to ann increase in the demand for capital, which in turn increased the productivity of labor. C. the supply of labor increased and therefore the productivity of labor increased. D. the factor substitution effect will cause the firm to substitute capital for the lower-priced labor.