Answer the following statements true (T) or false (F)
1. The optimal quantity of a public good is where the total benefits from it are equal to the total costs of producing it.
2. If car makers are required to install gadgets to improve the cleanliness of car-exhaust, we would expect the equilibrium quantity in the car market to decrease.
3. If the lumber companies are required to internalize the negative externalities of deforestation, then we should expect the equilibrium price of wooden furniture to decrease.
4. The Coase Theorem suggests that the government does not have to be involved at all in resolving a market failure due to externalities.
1. FALSE
2. TRUE
3. FALSE
4. TRUE
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Monetarists assume that people form their expectations only by
a. looking forwards b. looking backwards. c. using all available information. d. using publicly available forecasts.
Technical efficiency is achieved when a firm produces
A. Enough output to cover the opportunity cost of resources. B. An amount less than or equal to the production function. C. Below the opportunity cost for the resources it uses. D. At an amount indicated by a point on the production function.
In which of the following situations should a profit-maximizing firm leave its output unaltered?
A) MR > MC and Price > Average total cost B) MR = MC and Total revenue < Total variable cost C) MR < MC and Price < Average total cost D) MR = MC and Total revenue > Total variable cost
A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises
Indicate whether the statement is true or false