Local governments provide law enforcement, which benefits society, but if the costs of law enforcement exceed the benefits, the result is a situation of
A. Market failure.
B. Government failure.
C. Public choice theory.
D. Efficiency as long as there is some benefit.
Answer: B
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Long-run economic profit does not exist for fixed factors like land because
A) bidding drives up the price of the factor until no economic profit exists. B) there is no market for such factors. C) these factors have L-shaped isoquants. D) these factors will earn economic profits.
The shape of an experience curve suggests that
A) specialization does not matter. B) learning does not pay. C) experience can lower costs. D) none of these choices.
In the United States, the money for loans to businesses comes mainly from
a. corporate profits. b. the federal government. c. savings held in lending institutions. d. state and local governments.
The bowed shape of the traditional production possibilities curve reflects the
A) negative side effects of economic growth. B) fact that not all resources are equally well-suited to producing all goods. C) costs of unemployment. D) problems of inequality.