In absence of externalities, private costs are greater than social costs
a. True
b. False
Indicate whether the statement is true or false
False
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Suppose the government imposes a $1 tax on frisbees, and the price of a frisbee paid by demanders rises by $1
A) The price rise is consistent with a perfectly elastic supply for frisbees. B) The price rise is consistent with a perfectly elastic demand for frisbees. C) The price rise is consistent with a downward-sloping supply curve for frisbees. D) The price could never rise this much, so this situation cannot happen.
Suppose an economy produces milk and honey, and milk is plotted along the horizontal axis of the production possibilities frontier. The MRT is 2.5 at the current point of production, and the price of honey is $5 per unit
What is the current price of milk if the market outcome is efficient? A) $12.50 per unit B) $10 per unit C) $2 per unit D) $1 per unit
Carol has just purchased a cereal she saw advertised on TV because of the health benefits contained in the ad. The TV ad is an example of
A) mass marketing. B) direct marketing. C) indirect marketing. D) interactive marketing.
The Lucas supply function, in combination with the assumption that expectations are rational, implies that
A. both anticipated monetary and fiscal policy changes will affect real output. B. neither anticipated monetary policy changes nor anticipated fiscal policy changes will have an effect on real output. C. an anticipated monetary policy change will have no effect on real output, but an anticipated fiscal policy change will have an effect on real output. D. an anticipated monetary policy change will have an effect on real output, but an anticipated fiscal policy change will not have an effect on real output.