The free-rider problem is encountered when
A. all individuals are willing to pay for what they consume.
B. all individuals who consume a public good pay for it.
C. someone benefits from the consumption of a public good without paying his or her full share.
D. all goods consumed and produced are private goods.
Answer: C
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
If you know that total fixed cost is $200, total variable cost is $600, and total product is 4 units, then average total cost must be
A. $200. B. $250. C. $3,200. D. $800.
From time to time, the Federal Reserve buys back government bonds from the private sector through a process called
A) voluntary redemption procedures. B) backflip bond investments. C) open market purchases. D) bond recall procedures.
Producer surplus
A) increases if market price rises and the supply curve does not shift. B) decreases if market price rises and the supply curve does not shift. C) is equal to the maximum price consumers are willing to pay. D) is the same as the marginal cost. E) always must equal consumer surplus.