Externalities
A) are not reflected in market prices, so they can be a source of economic inefficiency.
B) do become reflected in market prices, so they can be a source of economic inefficiency.
C) are not reflected in market prices, so they do not adversely affect economic efficiency.
D) do become reflected in market prices, so they do not adversely affect economic efficiency.
E) may or may not become reflected in market prices, but do not have an impact on economic efficiency in either event.
A
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In the above figure, if output were restricted to 300 million pounds of turkey, then
A) the marginal social benefit would exceed the marginal social cost on the last pound of turkey traded by $0.80. B) there would be a deadweight loss of $40 million. C) there would be inefficient underproduction of turkey. D) All of the above answers are correct.
Identify the Marginal External Benefit (MEB) function, and briefly explain what this function is measuring.
Suppose you are a public official responsible for setting a retail disposal charge on antifreeze. Estimated marginal benefit and cost functions for antifreeze are as follows: MPB = 10.0 – 0.5Q MPC = MSC = 1.0 + 0.4Q MSB = 10.0 –1.1Q, whereMPB, MSB, and MPC are measured in dollars per gallon, and Q is in millions of gallons.
The market basket cost $300 in 2020, while it cost $250 in the base year. Therefore, the price index for 2020 is
A. 120. B. 80. C. 83. D. cannot be calculated because the inflation rate is not given.
All of the following are functions of the Federal Reserve System EXCEPT
A. to supply the economy with fiduciary currency. B. to act as the government's fiscal agent. C. to provide loans to developing countries. D. to hold depository institutions' reserves.