A common good:
a. is rivalrous in sonsuption and excludable
b. is nonrivalrous in consumption and nonexcludable
c. will tend to be over consumed
d. both a. and c.
Answer: c. will tend to be over consumed
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In economic theory, transaction costs refer to
A) fees charged by brokers, traders, or other agents rather than by principals. B) costs attributable to the operations of middlemen. C) costs of arranging and carrying out voluntary exchanges. D) costs of obtaining customers or of marketing a product. E) costs not borne by the persons creating them.
Given a price elasticity of demand of -0.33, a decrease in price will
A) reduce total revenue. B) increase total revenue. C) leave total revenue unchanged. D) decrease quantity.
A perfectly competitive firm need never consider
a. price because it cannot control price b. its fixed cost because it cannot shut down c. its market share because advertising keeps it competitive d. the effect of its own production on price e. barriers to entry because the barriers never change
What is the velocity of money?
A) The rate at which GDP increases in a year B) The speed of capital accumulation C) The rate at which money circulates through an economy D) The rate at which the Federal Reserve increases or decreases the money supply E) The rate at which the aggregate price level increases