Consider the production of some industrial good that creates air pollution. The table below gives the marginal social cost (MSC), the marginal cost (MC), and the marginal social benefit (MSB) for each level of output (Q)
Q MSC MC MSB 1 3 2 11 2 6 4 10 3 9 6 9 4 12 8 8 5 15 10 7 6 18 12 6 The inefficient market quantity is ________ and the efficient market quantity is ________. A) 4; 3
B) 6; 3
C) 3; 4
D) 4; 6
A
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An increase in the money supply and a decrease in real GDP at the same time is consistent with the equation of exchange if: a. velocity rises rapidly enough
b. velocity falls rapidly enough. c. the nominal GDP rises rapidly enough. d. the price level falls rapidly enough.
Which of the following terms depends on people re-depositing the money that they receive in the banking system?
a. Money multiplier b. Savings and loan c. Central bank d. The creation of money
_______ unemployment rises and falls with the business cycle.
a. Frictional b. Systematic c. Cyclical d. Temporary
Which of the following is a problem that keeps people from privately solving externality problems?
a. Each party involved holds out for a better deal. b. The externality is large. c. Only problems with a sufficiently large number of parties can be solved. d. There is a lack of government intervention.