An external COST occurs when
A. some of the benefits derived from the production or consumption of some good or service are enjoyed by a third party.
B. the production or consumption of some good or service inflicts costs on a third party without compensation.
C. private costs exceed social costs.
D. private costs exceed private benefits.
B. the production or consumption of some good or service inflicts costs on a third party without compensation.
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When the government's outlays exceed its tax revenue, the national debt
A) shrinks thanks to the budget surplus. B) grows to finance the budget deficit. C) shrinks thanks to the budget deficit. D) grows to finance the budget surplus. E) does not change because it has nothing to do with government outlays and tax revenue.
Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary
Force that encourages people to start businesses and attempt to improve their material well-being
a. profit motive b. capitalism c. consumer sovereignty d. voluntary exchange
Effective limit pricing between one incumbent firm and one potential entrant involves:
A. the incumbent linking the pre-entry price to post-entry profits only. B. the incumbent linking the pre-entry price to post-entry profits and the incumbent reducing price below the monopoly price to prevent entry. C. the incumbent reducing price below the monopoly price to prevent entry only. D. None of the statements are correct.