A subsidy is sometimes used by the government to correct the problems associated with
A) negative externalities.
B) positive externalities.
C) public goods.
D) monopolies.
Answer: B
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The prediction of permanent, growing shortages of fresh drinking water by the year 2050 assumes
A) water prices will increase. B) water prices will decrease. C) water prices will not adjust appropriately to coordinate the market. D) nobody will be able to collect water from rain and snowstorms.
Economic rent is a concept that can be applied
A) only to land, as that is the only resource that is in limited supply. B) only to land and natural talent. C) to any factor of production that is fixed in supply. D) to any resource or factor of production that has a supply curve with a positive (upward) slope.
A price ceiling imposed on a good that is below the equilibrium price will result in a shortage of that good
a. True b. False Indicate whether the statement is true or false
An oligopolistic firm that is deciding the price to charge, the output to produce, or the quality of product to offer, must consider
a. the regulatory price limits that are always present with oligopoly. b. the potential reactions of rivals in the market. c. the fact that per-unit costs will usually increase as the scale of production increases. d. that entry barriers into oligopolistic markets are low.