What does it mean to internalize an externality?
What will be an ideal response?
Internalization of an externality occurs when decision makers weigh the external costs and benefits of their actions.
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A British inventor sells a patent to a U.S. corporation for $25,000. If the U.S. financial account remains unchanged, ________.
A. the U.S. price level will fall and the unemployment rate will rise B. the U.S. price level will rise and the unemployment rate will fall C. both the U.S. price level and unemployment rate will rise D. both the U.S. price level and unemployment rate will fall
Refer to Figure 13.2. If the figure is viewed as a two-player game between Oliver and George, there would be
A) no Nash equilibria. B) one Nash equilibrium where both players end up at the M position. C) two Nash equilibria, one where Oliver ends up at position L4 and George ends up at position C4, and one where both players end up at position M. D) five Nash equilibria, each represented by the two players ending up an equal distance from M.
Quebec is capable of producing 10 pallets of wood shingles or 8 barrels of maple syrup with a unit of labor. Vermont is capable of producing 12 pallets of wood shingles or 12 barrels of maple syrup with a unit of labor. Assume that this is typical of the labor force as a whole. Which location has the absolute advantage and which has the comparative advantage, in the production of each good? Can these locations reap gains from trade?
What will be an ideal response?
If a monopoly can produce a good at zero marginal cost, then its Lerner Index is
A) zero. B) one. C) infinity. D) undetermined.