Answer the following statement(s) true (T) or false (F)
1. According to the textbook application, CD packaging is a negative production externality.
2. At a competitive equilibrium, M? = 0, but at an efficient equilibrium MEC = 0.
3. At an efficient equilibrium, MSB = MSC, which implies that M? = MEC.
4. Property rights are the set of valid claims to a good or resource that allow its use and the transfer of ownership through a sale.
5. According to the Coase Theorem, assignment of property rights will permit bargaining that leads to an efficient solution only in the absence of externalities.
1. False
2. False
3. True
4. True
5. False
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If some industries exhibit increasing returns to scale in each country, we should not expect to see
A) intraindustry trade between countries. B) perfect competition in these industries. C) interindustry trade between countries. D) Either B or C.
With regional specialization, a nation is bound to suffer some mismatch unemployment. For example, in the early 1990s the highest regional unemployment rate was in
A) California. B) the South. C) the Midwest. D) none of the above because the unemployment rate as essentially equal in all regions.
According to the IS curve, the tax multiplier is always ________
A) larger in absolute value than the expenditure multiplier B) equal to the expenditure multiplier C) smaller in absolute value than the expenditure multiplier D) equal to one
When states make car insurance mandatory for all drivers, it
A) raises rates for everyone because it brings bad drivers into the pool. B) raises rates for high-risk drivers. C) may lower rates for all drivers to the extent that it keeps low-risk drivers in the pool. D) prevents high-risk drivers from "selecting out," to the detriment of low-risk drivers. E) increases the amount of information available to insurers about the population.