Which of the following could be evidence of a market failure?
A) There are only a handful of firms competing against each other in an industry.
B) The market price of a product is above the average cost of production.
C) Resources in an economy are not fully utilized.
D) Market prices do not reflect true production costs.
D
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The above figure shows the domestic market for wheat. Suppose this market is isolated from global competition and the government intervenes by setting a support price of $15 a ton. The quantity produced once the price support is in place is
A) 400 million tons. B) 300 million tons. C) 100 million tons. D) 250 million tons. E) 200 million tons.
Why are elected representatives far more likely to be informed about the issues on which they vote, compared to the typical citizen-voter?
A) A politician loves politics; citizens hate it. B) A politician is more patriotic than citizens. C) A politician is rationally ignorant; citizens are just plain ignorant. D) A politician's vote has a far greater probability of affecting the outcome, compared to a citizen's vote.
Which of the following is NOT part of the monetary base?
A) currency B) reserves of depository institutions C) the public's checking deposits at commercial banks D) commercial banks' reserves.
An externality is an example of a market failure
Indicate whether the statement is true or false