"Private costs are borne by individuals while social costs are borne by society." Do you agree or disagree? Why?
What will be an ideal response?
Disagree. Social costs are private costs plus external costs, and external costs are borne by people who are not part of the exchange. They are still borne by individuals though.
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Use the figure below to answer the following question.
If actual production and consumption occur at Q1 and the price is P2, deadweight loss equals area
A. f. B. b. C. d. D. b + d.
In the above figure, if A is the initial equilibrium point and there is an unanticipated rise in aggregate demand from AD1 to AD2, then
A) the new short-run equilibrium will be at point B. B) the new short-run equilibrium will be at point D. C) the new long-run equilibrium will be at point B. D) real Gross Domestic Product (GDP) per year will fall below Y1.
An economic recession in Japan will cause the aggregate demand curve in the United States to shift to the right.
Answer the following statement true (T) or false (F)
When one player has to make a decision before the other player, the situation is called a:
A. commitment game. B. simultaneous game. C. sequential game. D. prisoner's dilemma.