Refer to the above figure. The market equilibrium quantity is Q1. Point Q2 represents the optimal amount of production. This indicates that there is
A. a positive externality.
B. a negative externality.
C. regressive taxation of the product.
D. a public good which should be produced.
Answer: A
You might also like to view...
Production indifference curves bow inward toward the graph’s origin because of
A. the law of diminishing returns to a single input. B. the law of diminishing marginal returns to scale. C. constant returns to scale. D. minimizing costs in the short run.
The government budget constraint implies that
A) government borrowings = government spending+ transfers - taxes and user charges. B) government borrowings = taxes and user charges + government spending - transfers C) government spending = transfers - taxes and user charges - government borrowing. D) government spending = government borrowing - transfers - taxes and user charges
The longer the time frame involved, the more likely it is that the demand will be relatively
A) elastic. B) inelastic. C) steep. D) flat.
Vertical merger occurs when
A) two firms merge where one had sold its output to the other as an input. B) the merger moves the combined firm onto the horizontal portion of its long-run average cost curve. C) two firms merge where each is about the same size. D) two firms producing a similar product merge.