Compared to ideal economic efficiency, when the production of a good generates external costs, competitive markets will result in an output that is too:
A. large and a price that is too high.
B. large and a price that is too low.
C. small and a price that is too high.
D. small and a price that is too low.
Answer: B
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When all other influences on work plans remain the same, the
A) lower the real wage rate, the smaller the quantity of labor supplied. B) higher the real wage rate, the greater the quantity of labor demanded. C) lower the real wage rate, the greater the quantity of labor supplied. D) lower the real wage rate, the smaller the quantity of labor demanded. E) lower the real wage rate, the larger the labor force participation.
One way of reducing the moral hazard problem in the automobile insurance market is for drivers to
A) carry high deductibles. B) carry no deductibles. C) all have good driving records. D) never make any claims.
With regard to incomes at the time of the Revolution,
(a) colonial incomes before taxation were high, but because of heavy taxation, after-tax incomes were lower than those of the British. (b) there is no data available that provide any information on the subject. (c) both before-tax and after-tax colonial incomes were lower than those in England. (d) incomes in the colonies were higher than in England, especially after-tax incomes, because of relatively light taxation of the colonists.
In the short run, a decrease in the market demand will cause a(n) ________ in the market equilibrium price and a perfectly competitive firm's demand and marginal revenue curve to shift ________.
A) increase; upward B) decrease; upward C) increase; downward D) decrease; downward