The use of commodity money
a. has a high opportunity cost.
b. does not provide an adequate unit of account.
c. creates a mutual coincidence of wants problem.
d. creates inflation.
e. All of the above.
a. has a high opportunity cost.
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If the government places a $0.50 tax on an item for which demand is perfectly elastic
A) the entire tax will be paid by the consumer. B) the tax will be split equally between the consumer and producer, with each paying exactly $0.25. C) most of the tax will be paid by the consumer. D) the entire tax will be paid by the producer.
The effect that an additional user of a good or participant in an activity has on the value of that good or activity for others is called:
A. network externality. B. social externality. C. negative externality. D. private externality.
Producers have little incentive to produce a public good because
a. the social benefit is less than the private benefit. b. the social benefit is less than the social cost. c. there is a free-rider problem. d. there is a Tragedy of the Commons.
"Unlike a monopoly, consumer surplus in a perfectly competitive market is zero." Do you agree or disagree? Why?
What will be an ideal response?