If a negative externality exists in the production of paper and paper is sold in a perfectly competitive market, at the equilibrium output:
A. additional net gains to society are not possible from either increasing or decreasing the output of paper.
B. the marginal social benefit of paper equals its marginal social cost.
C. additional net gains to society are possible by increasing the output of paper.
D. additional net gains to society are possible by reducing the output of paper.
Answer: D
You might also like to view...
In financial markets, actual market prices sometimes diverge from the equilibrium price because
A) supply is often greater than demand. B) demand is often greater than supply. C) supply is equal to demand. D) of geographical and temporal fragmentation.
When money supply __________, the real rate of interest __________
A) increases; falls B) increases; rises C) decreases; rises D) increases; remains unchanged
According to the circular flow model, which statement is true?
a. Households with income from land and capital are wealthier than households with income only from labor. b. An entrepreneur who earns a wage must have at least two jobs. c. A household that owns no land or capital can earn only wages and/or profit. d. All services are produced by entrepreneurs. e. Some workers are only paid in interest and profit.
Draw an appropriate diagram to represent the business cycle and label each of the five phases. Provide a brief description of each phase