In a market supply and demand graph, the socially efficient outcome occurs
a. Where the private marginal benefits intersect with the social marginal costs
b. Where the private marginal benefits intersect with the private marginal costs
c. Where the social marginal benefits intersect with the social marginal costs
d. Where the social marginal benefits intersect with the private marginal costs
e. Where externalities are maximized
Answer: c. Where the social marginal benefits intersect with the social marginal costs
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What term is used to describe the lowest point of a business cycle?
A) peak B) trough C) expansion D) recession
If income is equal to total spending, then in a closed economy, it is equal to:
A. consumption plus investment spending. B. savings plus investment. C. savings minus investment. D. consumption minus investment spending.
The market mechanism:
A. Works through central planning by the government. B. Eliminates market failures created by the government. C. Uses prices as a means of communication between consumers and producers. D. Is very inefficient since consumers cannot communicate directly with producers.
Because monopolists are protected by high barriers to entry, they:
A. may be able to earn long-run economic profits. B. will not minimize the per-unit cost of producing their output. C. will price their product at the highest possible price. D. seek economic profit; however, they are not able to earn it in the long run.