Which of the following statements is false?
A. If a negative externality exists, the market output is greater than the socially optimal output.
B. If a positive externality exists, the market output is less than the socially optimal output.
C. If there are no external costs or benefits, then it follows that marginal private costs equal marginal social costs and marginal private benefits equal marginal social benefits.
D. When a positive externality exists, marginal social benefits are greater than marginal private benefits.
E. none of the above
Answer: E
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Exports are:
A) positively related to the level of foreign income and negatively related to the exchange rate. B) positively related to the level of foreign income and positively related to the exchange rate. C) negatively related to the level of foreign income and negatively related to the exchange rate. D) negatively related to the level of foreign income and positively related to the exchange rate.
The figure above shows the demand and cost curves facing a price-setting firm. In profit-maximizing (or loss-minimizing) equilibrium, the Lerner index is ________, and the elasticity of demand is ________.
A. 0.5; -2.0 B. 0.667; -1.5 C. 0.6; -1.667 D. 1.33; -0.75 E. 1 ; -1
Small differences in economic growth rates can eventually produce large differences in living standards because of compounding.
Answer the following statement true (T) or false (F)
Potential GDP in the United States
A) does not change over time. B) grows as the economy grows. C) changes over a given business cycle. D) declines over time.