"Household production" refers to
A) the manufacturing of durable household products.
B) the home building sector of the economy.
C) home-based craft businesses.
D) goods and services people produce for themselves.
Answer: D
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Assume that production from an electric utility caused acid rain and that the government imposed a tax on the utility equal to the cost of the acid rain. This is an example of
A) a Pigovian tax. B) the Coase Theorem. C) a transactions cost. D) a Pigovian subsidy.
It costs firm A $800 to produce five radios and it costs firm B $500 to produce five batteries. If Firm A merges with firm B, it can produce both the five radios and the five batteries for $1000 . The firm has experienced
a. Economies of Scale b. Economies of Scope c. Diseconomies of Scale d. Diseconomies of Scope
If the Fed followed a rule for monetary policy, the time inconsistency problem would be eliminated
a. True b. False Indicate whether the statement is true or false
Which of the following is the best example of a supply-side market failure?
A) No one provides street lights in a town because, once the lights are in operation, people don't have to pay to use them. B) Street performers don't get full payment for the value of their output because people watch and enjoy the shows without paying the artist. C) Government imposes taxes on the production of a socially desirable good. D) A firm keeps its production costs down by dumping its waste in the nearby river, adversely affecting water quality for residents in the area.