Many detrimental externalities occur because
A. persons do not pay the full social cost of using a resource.
B. persons do not pay the full private cost of using a resource.
C. companies do not pay the market price for natural resources.
D. companies pay more than the full social cost of using a resource.
Answer: A
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The figure above shows that monopoly is ________ because it produces a level of output at which ________
A) inefficient; marginal benefit equals marginal cost B) efficient; marginal benefit equals marginal cost C) efficient; marginal benefit exceeds marginal cost D) inefficient; marginal benefit exceeds marginal cost E) efficient; producer surplus is maximized
The marketing people for AT&T believe that if they lower the price of long-distance phone calls by 5 percent, their quantity demanded will increase by 15 percent. If they are correct in their belief, then
A) the demand for long-distance phone calls is price inelastic. B) the total revenue from long-distance phone calls will increase if they lower the price. C) the demand for long-distance phone calls is income elastic. D) the total revenue from long-distance phone calls will decrease if they lower the price.
The price of X was $10 in year 1 and $14 in year 2. Which of the following could be the correct reason for the rise in price?
A) The demand for X was higher in year 2 than in year 1, ceteris paribus. B) The supply of X was lower in year 2 than in year 1, ceteris paribus. C) The demand was higher, and the supply was lower, in year 2 than in year 1. D) a and b E) a, b, and c
Which of the following would cause a rightward shift in the AD curve?
A) an increase in the price level B) a decrease in the price level C) an increase in imports D) a decrease in the quantity of money available in the economy E) an increase in government purchases of goods and services