Fred receives $14,000 per year from the federal government because he is disabled. This is a
A) demerit good.
B) transfer payment.
C) non-rival good.
D) free rider problem.
Answer: B
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Answer the following statement(s) true (T) or false (F)
1. Each user of a common property imposes a negative externality on its other users. 2. The producer of a public good creates a positive externality, so that such goods tend to be overproduced. 3. The tragedy of the commons is a situation where too much of an input is used by individuals, collectively making each individual worse off. 4. When people have identical tastes, an increase in the demand for a common property's use will increase the social gain it creates. 5. People use a common property up to the point where the marginal cost of using it equals the social marginal benefit received from it.
Advertising has no effect on the demand schedule for a good.
Answer the following statement true (T) or false (F)
Dumping occurs when a foreign monopolist charges ______ price in the domestic market than/as in a foreign market.
a. a lower b. a higher c. the same d. an equivalent
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In Exhibit 3-15, if the market price of good X is initially $1.50, a movement toward equilibrium requires:
A. no change, because an equilibrium already exists. B. the price to fall below $1.50 and both the quantity supplied and the quantity demanded to fall. C. the price to remain the same, but the supply curve to shift to the left. D. the price to fall below $1.50, the quantity supplied to fall, and the quantity demanded to rise.