A free market with externalities ______ social surplus.
Fill in the blank(s) with the appropriate word(s).
Answer: does not maximize
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The term "fixed input" refers to:
A) inputs to production that do not vary with respect to quality. B) inputs to production that do not vary in price. C) inputs to production that yield a constant or "fixed" marginal product. D) inputs to production, the quantity of which cannot be varied in the short run.
If all used cars in a market with symmetric information about quality are sold at the same price, then
A) sellers of good quality cars are subsidizing sellers of lemons. B) buyers of good quality cars are subsidizing buyers of lemons. C) sellers of lemons are subsidizing sellers of good quality cars. D) sellers of good quality cars are subsidizing buyers of lemons.
The key reason that the Laspeyres price index tends to overstate the impact of price changes on consumers is that it:
A) only accounts for price increases and ignore price decreases. B) measures prices two periods after the actual price changes occurred. C) ignores the possibility that consumers alter their consumption as prices change. D) All of the above are correct. E) none of the above
A country with an overvalued currency
A. will have a balance of payments deficit. B. will suffer losses of foreign reserves. C. must intervene in the foreign-exchange market to buy its own currency. D. All of the above are correct.