Consider two goods--one that generates external benefits and another that generates external costs. A competitive market economy would tend to produce
a. too much of both goods.
b. too little of both goods.
c. too much of the good that generates external benefits and too little of the good that generates external costs.
d. too little of the good that generates external benefits and too much of the good that generates external costs.
D
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Which of the following underground economy activities would be considered a black market?
A. Harry makes Sally dinner while she changes the oil in his car. B. Carrie waits tables at the local restaurant for salary and tips, but only reports her salary as income. C. Celeste sells counterfeit designer bags at a roadside stand. D. Ben provides child care in his home for cash payments and does not report the income.
The federal government agency that insures demand deposits for up to $100,000 is the
a. Federal Reserve System b. Federal Deposit Insurance Corporation c. Federal Savings and Loan Insurance Corporation d. Resolution Trust Corporation e. Bank Insurance Trust Corporation
The reason economists create a market basket is to:
A. see how the cost of buying the goods and services on the list changes over time. B. get a sense of how people buy items on a weekly basis. C. know how each individual consumer is being affected by changing prices. D. track its changing prices to reflect changes in purchasing patterns of firms.
A monopolist earns $50 million annually and will maintain that level of profit indefinitely, provided no other firm enters the market. If another firm successfully enters the market, the incumbent's profits remain at $50 million the first period, but fall to $25 million annually thereafter. The opportunity cost of funds is 10 percent, and profits in each period are realized at the beginning of each period. What is the present value of the firm's current and future earnings if entry occurs?
A. $250 million B. $400 million C. $300 million D. $500 million