Markets tend to underallocate resources to the production of a good when
A) there are negative externalities.
B) there are positive externalities.
C) there are public goods produced.
D) equilibrium occurs.
B
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The U.S. economy is experiencing rising output, rising employment, rising incomes and falling unemployment. These conditions best describe a business cycle ________
A) recession B) peak C) trend D) trough E) expansion
The general set of rights to own private property and exchange goods, services, and financial assets with minimal government interference is defined as
A) capitalism. B) market socialism. C) economic freedom. D) economic privilege.
GLS is consistent and BLUE if
A) X is predetermined. B) the error process is AR(1). C) X is strictly exogenous. D) all the roots are inside the unit circle.
There are 3,000 families in a small town that are affected by air pollution from a local factory. The air pollution could be reduced if the company spent $10,000 on upgraded ventilators. The company agrees to install the ventilators if the affected families contribute the $10,000. However, because individuals will benefit from the reduction in air pollution whether they contribute or not, most people will not contribute and the firm will not install the ventilators. This outcome is an example of the
A. drop-in-the-bucket problem. B. collective action problem (that arises when there are too many parties involved). C. Coase theorem. D. free-rider problem.