A positive externality or spillover benefit occurs when:
A. product differentiation increases the variety of products available to consumers.
B. the benefits associated with a product exceed those accruing to people who consume it.
C. a firm does not bear all of the costs of producing a good or service.
D. firms earn positive economic profits.
Answer: B
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Bobby is buying slices of pizza and place a value of his utility of the first slice at $5; a second slice at $4, and a third slice at $2. If Bobby eats three slices of pizza for lunch, his total utility is equal to
A. $5 less what he had to pay. B. $2, since that’s the marginal utility of the last slice. C. the marginal utility of the third slice. D. $11.
Persons who argue against the deliberate use of fiscal and monetary policies to smooth out the business cycle are referred to as
A) nonactivists. B) fine-tuners. C) activists. D) b and c E) none of the above
Given a vertical aggregate supply curve, which of the following is most likely to occur if the Fed pursues restrictive monetary policy?
A. The equilibrium output will decrease but the price level will stay the same. B. The equilibrium price level and output will both decrease. C. The equilibrium price level and output will both increase. D. The equilibrium price level will decrease but output will stay the same.
In the figure above, the United States ________ airplanes per year
A) imports 500 B) exports 500 C) exports 400 D) imports 400 E) exports 200