Under the Texas law known as "rule of capture," land owners "get to pump as much of the water under it as they want. . .. 'This means whoever sucks it out first, it's their water'-even if that means there isn't enough left for others." Under this law, pumping large amounts of water:
A. imposes a negative externality on others.
B. imposes the free rider effect on others.
C. imposes a positive externality on others.
D. is a private decision with no effects on others.
Answer: A
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The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B B. recessionary; C C. recessionary; A D. expansionary; A
In 2008, real GDP in the United States was $13,312 billion. In 2009, real GDP in the United States was $13,112 billion. What was the U.S. economic growth rate from 2008 to 2009?
A) -1.5 percent B) 1.5 percent C) 0.98 percent D) 0.12 percent E) $200 million
When using equity financing, firms run the risk of ________.
A) losing a controlling interest to shareholders B) acquiring capital through the sale of shares C) incurring an unmanageable amount of debt D) falling victim to currency exchange rates
Consider a Cournot duopoly with the following inverse demand function: P = 10 ? 0.5Q1 ? 0.5Q2. The firms' marginal costs are identical and are given by MCi(Qi) = 3. Based on this information, firm 1 and 2's reaction functions are:
A. r1(Q2) = 14 ? 0.25Q2 and r1(Q2) = 14 ? 0.25Q1. B. Q1 = 14 ? 0.25Q2 and Q2 = 14 ? 0.25Q1. C. r1(Q2) = 7 ? 0.5Q1 and r2(Q1) = 7 ? 0.5Q2. D. Q1 = 7 ? 0.5Q2 and Q2 = 7 ? 0.5Q1.