A negative externality:
A. is a payment received to parties not involved in the production or consumption of a good.
B. results from the absence of well-defined property rights.
C. is a cost borne by parties not involved in the production or consumption of a good.
D. is a cost borne by parties not involved in the production or consumption of a good and results from the absence of well-defined property rights.
Answer: D
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Coffee and donuts are complements in consumption. Suppose the economy expands so that consumer income increases, and coffee is a normal good
What impact does this change in the coffee market have on the donut market under a general equilibrium analysis? A) Donut demand shifts rightward and donut price and quantity increase B) Donut demand shifts rightward, donut price increases, and donut quantity declines C) Donut demand shifts leftward, donut price declines, and donut quantity increases D) Donut demand shifts leftward and donut price and quantity decline
If the average annual growth rate in real GDP for a nation during the last decade was 4 percent per year and the average annual population growth rate was 3 percent per year during the same period, then the average annual growth rate of per capita GDP was
A) 1.00 percent. B) -1.00 percent. C) 0.75 percent. D) 1.33 percent.
Why don't competitive markets do a good job providing public goods?
a. Because public goods generate negative externalities, and pollution taxes reduce the incentive for firms to supply public goods. b. Because it is difficult to exclude people from gaining benefits from public goods without paying for them, and so market demand does not reflect the benefits to society from the public good. c. Because firms cannot produce enough to satisfy market demand. d. Because people do not receive benefits from public goods.
Answer the following statements true (T) or false (F)
1. In the monetarist view, the economy is inherently stable, but the mismanagement of monetary policy creates instability. 2. Monetarists argue that V in the equation of exchange is stable and thus a change in M will bring about a direct and proportional change in nominal GDP. 3. If M is $1,000, P is $8, and Q is 500, then V must be 6. 4. The equation of exchange indicates that an increase in money supply will always lead only to inflation. 5. Real-business cycle theory views changes in resource availability and technology as shifting aggregate demand and thus causing macroeconomic instability.