Suppose that one firm produces a product that results in negative external costs to society. This information suggests that
A) resources are under-allocated to the firm.
B) the equilibrium market price of the product includes the external costs borne by society.
C) resources are over-allocated to the firm.
D) at the market price, quantity demanded is less than quantity supplied.
C
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According to the law of demand, there is an inverse relationship between price and quantity demanded. That is, the demand curve for goods and services slopes downward. Why?
A. when the price of a good increases, consumers' purchasing power falls, and they cannot buy as much of the good as they did prior to the price change B. when price increases, quantity demanded increases C. when the price of a good increases, consumers purchases complementary goods that are now relatively less expensive D. A and C only
What is dollarization?
a. ?Pegging the value of a domestic currency against the market value of gold. b. ?Pegging the value of a foreign currency against the U.S. dollar. c. ?Maintaining an acceptable exchange rate based on government intervention. d. ?Increasing the price of goods based on the supply of money. e. ?Using the dollar or some other foreign currency together with or instead of a domestic currency.
In order to raise the federal funds rate, the Fed ________ government securities in open market operations, so that banks' reserves ________ and the quantity of money ________
A) buys; decrease; increases B) buys; increase; decreases C) sells; decrease; decreases D) sells; increase; decreases E) buys; increase; increases
The Heckscher-Ohlin model predicts all of the following EXCEPT
A) the volume of trade. B) which country will export which product. C) which factor of production within each country will gain from trade. D) that relative wages will tend to become equal in both trading countries. E) that trade increases a country's overall welfare.