Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point E to Point A, the opportunity cost of hybrid cars, measured in terms of motorcycles
A. increases.
B. initially increases, then decreases.
C. decreases.
D. remains constant.
Answer: A
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Suppose that producers are richer than consumers. Is a price support program fair? Explain your answer
What will be an ideal response?
The average duration of unemployment across the labor force is about
A) 25 weeks. B) 15 weeks. C) 8 weeks. D) 4 weeks.
In a perfectly competitive resource market the labor supply curve facing the single firm is
A) vertical. B) horizontal. C) downward sloping. D) upward sloping.
Explain how positive externalities cause a wedge between private marginal costs and social marginal costs. Give an example of a positive externality and explain why it is, in fact, a positive externality. Draw a supply/demand diagram and add a social marginal cost curve that represents the presence of the positive externality. Explain the relationship between the equilibrium quantity and that which is socially efficient.
What will be an ideal response?