Which of the following is true?
i. In an unregulated market with an external benefit, consumers don't take it into account and consume less than the efficient quantity.
ii. Marginal social cost equals marginal private cost minus marginal external cost.
iii. An unregulated market produces more than the efficient quantity of a good with an external cost.
A) Only i
B) Only ii
C) Only iii
D) i and ii
E) i and iii
E
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To increase its economic growth, a nation should
A) limit the number of people in college because they produce nothing. B) encourage spending on goods and services. C) encourage education because that increases the quality of labor. D) increase current consumption. E) eliminate expenditure on capital goods.
An market in which the Herfindahl-Hirschman Index (HHI) is 2,500 is considered to be
A) an oligopoly. B) monopolistically competitive. C) a monopoly. D) perfectly competitive.
Refer to the above figure. Suppose the equilibrium moves from E' to point E. An event that could have caused this movement is
A) an increase in the real interest rate in the United States. B) an increase in U.S. productivity. C) an increase in the perceived stability of the U.S. economy. D) an increase in demand for Japanese-produced goods by U.S. residents.
In the medium run, an increase in government spending that causes an increase in the budget deficit
A) affects the level of output but not its composition. B) affects both the level and composition of output. C) will not affect the composition of output but will affect the price level. D) is neutral. E) none of the above