The distribution of surplus received from a subsidy offered in a market where a positive externality is present depends on:
A. how the subsidy is distributed among those affected by the externality.
B. if those who are affected receive their true value of the externality.
C. where the government gets the money to pay for the subsidy.
D. None of these statements is true.
C. where the government gets the money to pay for the subsidy.
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Economic activity moves from a period of expansion to a ________ and then moves into a period of ________ until it reaches a ________.
A. trough; recession; peak B. peak, recession; trough C. peak; expansion; trough D. trough; expansion; peak
The table above shows the production possibilities for an economy. When the economy produces a combination of 900 books and 50 loaves of bread,
A) production efficiency occurs because resources are not overused. B) allocative efficiency is achieved because both goods are produced. C) production efficiency is not achieved. D) allocative and production efficiency are both achieved. E) production efficiency is not achieved but allocative efficiency might be achieved.
If a firm was owned by its employees,
A) there is a higher probability that wage reductions would outweigh layoffs. B) those in charge would not act any differently than regular owners; there would still be layoffs. C) those not in charge would remain risk neutral. D) wage reductions would be lower than if the firm was run for profit.
In the liquidity trap, the demand curve for investment is horizontal
Indicate whether the statement is true or false