In a competitive market, if the production process involves an external cost, such as pollution of the environment, the market will
a. produce the economically efficient outcome.
b. result in a market price that is higher than the efficient one.
c. register a price that is lower than the efficient one.
d. result in too little of the good being produced compared to the ideal efficient outcome.
C
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A recession is a period of time in which real GDP falls.
Answer the following statement true (T) or false (F)
In Figure 3-7, suppose D1 and S1 indicate the initial conditions in the market for ice cream. Which of the following changes would tend to cause the shift from D1 to D2 in the market for ice cream?
a. a decrease in the price of sugar, an ingredient used to produce ice cream b. an increase in the price of frozen yogurt, a substitute for ice cream c. abnormally cold weather that decreased consumer desire for ice cream d. an increase in the price of milk, an ingredient used to produce ice cream
If nominal GDP is growing more quickly than real GDP, which is most likely?
A. rising prices B. falling prices C. an expansion D. a recession
For a pure monopolist the relationship between total revenue and marginal revenue is such that:
A. marginal revenue is positive when total revenue is at a maximum. B. total revenue is positive when marginal revenue is increasing, but total revenue becomes negative when marginal revenue is decreasing. C. marginal revenue is positive when total revenue is increasing, but marginal revenue becomes negative when total revenue is decreasing. D. marginal revenue is positive so long as total revenue is positive.