With defined property rights, an externality
A. will not lead to a misallocation of resources.
B. must lead to society producing inside its production possibilities frontier.
C. may be internalized with voluntary contracting, under certain circumstances.
D. can only be corrected with government intervention.
Answer: C
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If the production possibilities frontier between bottled water and water in a jug is a straight line, which of the following statements would be correct?
A) Resources are equally productive at producing either product. B) There is no decrease in the production of one good when the production of the other is increased. C) There is no tradeoff between the two goods. D) A large amount of unemployment must exist. E) Producing more of one good gives the economy a free lunch.
Discount loans available to health banks which can be used for any purpose are called
A) primary credit. B) secondary credit. C) seasonal credit. D) repo loans.
Suppose that when output is 20, marginal cost is $20, and average total cost is $30 . Then which of the following is most likely to be true?
a. Average total cost is declining. b. Average total cost is constant. c. Average total cost is rising. d. Average total cost is less than average fixed cost.
The consumption function expresses the:
a. relation between consumption and dissaving. b. relation between consumption and disposable personal income. c. purposes of consumption. d. relation between consumption and dissaving.