Explain intuitively why the market for a nonexcludable good fails to provide an efficient quantity.
What will be an ideal response?
It takes resources to produce a good, irrespective of its excludability in consumption. If a good is not excludable, then producers of the good face the free-rider problem. If people have extremely strong incentives to free ride, nonexcludable goods will not be provided by private sectors.
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A monopsony maximizes its profit by hiring the level of employment that sets
A) labor supply equal to labor demand. B) the value of marginal product equal to the wage. C) the value of marginal product equal to the marginal cost of labor. D) the value of marginal product equal to the demand for labor.
The government can internalize externalities by taxing goods that have negative externalities and subsidizing goods that have positive externalities
a. True b. False Indicate whether the statement is true or false
Passive policy advocates rely on the economy's natural ability to correct itself in case of unemployment because of: a. the lack of any real concern for those who have no jobs
b. the conviction that unemployment is relatively harmless. c. the belief that active economic policy is likely to be either ineffective or harmful. d. the desire to await further economic data before intervening. e. the belief in the law of diminishing returns.
Tonya, who is rich, and Jerome, who is poorer, both buy orange juice and croissants for lunch at the student cafeteria. Their budget constraints on a diagram with orange juice on the vertical axis and croissants on the horizontal have the same
A) horizontal intercepts. B) vertical intercepts. C) slopes. D) midpoints.