Explain why a subsidy will not solve the problem of producing less than is socially optimal of a pure public good
Although a subsidy will lower the price of the good, people will still prefer to be free riders, that is, they
prefer to wait until someone else provides the good and then use it for free. A subsidy will not solve the
free-rider problem and so will not correct the problem.
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How do we arrive at a Nash equilibrium in a matrix game?
What will be an ideal response?
By current U.S. law, anyone generating, storing, or transporting hazardous waste must pay to clean it up if it leaks or is otherwise discharged into the environment. This law has been in effect
a. since World War II b. since 1960 c. since 1970 d. since 1980 e. only since 1990
If demand for a good increases and supply remains constant equilibrium price:
a. Will increase, and equilibrium quantity will decrease b. And quantity will both increase c. And quantity will both decrease d. Will decrease, and equilibrium quantity will increase
Classical economists held the view that in the economy:
A. Demand creates its own supply B. Unemployment is temporary and is soon eliminated C. There is an imbalance between saving and investment D. It is difficult for an economy to adjust because wages and prices are inflexible