Social demand equals market demand plus externalities when there are positive external benefits.
Answer the following statement true (T) or false (F)
True
If a product yields external benefits, the social demand is greater than the market demand by the amount of the externality.
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Scott and Cindy both produce only pizza and tacos. In one hour, Scott can produce 20 pizzas or 40 tacos. In one hour, Cindy can produce 30 pizzas or 40 tacos. Based on these data,
A) Cindy has a comparative advantage at producing tacos. B) Scott has a comparative advantage at producing tacos. C) Cindy and Scott have the same comparative advantage in producing tacos. D) neither Cindy nor Scott has a comparative advantage in producing tacos. E) Cindy and Scott have the same comparative advantage in producing pizzas.
One of the major reasons for the U-shaped average total cost curve is the fact that
A) there are increasing returns from labor regardless of the number of workers employed. B) there eventually are decreasing returns from labor as more workers are employed. C) prices fall as output increases. D) the average fixed cost increases as more output is produced. E) the variable cost decreases as more output is produced.
During the housing market and financial crises of 2007 and 2008, the Fed increased the volume of discount loans in an attempt to
A) reassure financial markets and promote financial market stability. B) stabilize prices and reduce the growing inflation rate. C) eliminate structural unemployment to lower the unemployment rate. D) attract foreign investment and stabilize interest rates.
Borrowers:
A. gain from inflation, as the value of their debt decreases. B. lose with inflation, as the value of their debt decreases. C. gain from inflation, as the value of their debt increases. D. lose with inflation, as the value of their debt increases.