For many pure public goods like fireworks displays, weather forecasts, and television broadcasts the marginal cost of serving one more consumer is ________, and the optimal quantity of the public good occurs when ________.
A. zero; provision is infinite.
B. zero; the marginal benefit of the public good equals zero.
C. greater than the average cost; the government provides the good.
D. determined by average cost rather than marginal cost; price equals average cost.
Answer: B
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Which of these changes is observed in an economy when a recessionary gap is closed in the long run?
a. An increase in the inflation rate and a decrease in the unemployment rate b. An increase in the level of output and a decrease in the price level c. An increase in both the rate of output and the price level d. A decrease in both the rate of output and the price level e. A decrease in the inflation rate and an increase in the unemployment rate
If a country has a trade deficit
a. it has positive net exports and positive net capital outflow. b. it has positive net exports and negative net capital outflow. c. it has negative net exports and positive net capital outflow. d. it has negative net exports and negative net capital outflow.
One of the reasons that pollution problems are as large as they are is that
A. markets let individuals and firms deplete valuable resources without charging money for doing so. B. markets are incapable of incorporating valuable resources such as air and pure water. C. governments use resources without paying for them the way that individuals and firms must. D. markets are not an efficient means to address scarcity.
In the short run, international trade allows a monopolistically competitive firm an opportunity:
a. to produce more output. b. to earn monopoly profits. c. to reduce its average costs. d. to produce more output, earn monopoly profits, and reduce its average costs.