The basic reason that a competitive unregulated market produces an inefficient amount of a good with an external cost is because
A) producers cannot measure marginal social cost.
B) producers do not pay the external cost.
C) the general public does not care about external costs.
D) external costs are not a political issue.
E) the external cost is paid by consumers rather than producers.
B
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Which of the following statements regarding U.S. economic growth is NOT correct?
A) Over the past 100 years, on the average real GDP per person grew 2 percent a year. B) The average annual growth rate of real GDP per person in the United States was rapid during World War II. C) In the 1930s, real GDP fell well below its trend. D) The growth rate of real GDP per person accelerated between 1973 to 1984.
The above table shows the marginal benefit from submarines for the only two citizens of a country. Submarines are a public good. If submarines cost $25 a piece to produce, who would vote for the purchase of four submarines?
A) both Katie and Bobby B) Katie only C) Bobby only D) nobody
Refer to Figure 9.9. At free trade, domestic producer surplus would be
A) $2,500. B) $50,000. C) $1,250,000. D) $2,500,000. E) $20,000,000.
When asymmetric information problems drive high quality products from a market, we refer to this situation as:
A) adverse selection. B) moral hazard. C) a lemons problem. D) A and C are correct. E) B and C are correct.