A . What kind of market failure is associated with goods that have negative externalities? b. How can the government intervene in free markets to correct the market failure associated with negative externalities?
a . The market that produces more than is socially optimal is the market failure associated with goods that
have negative externalities.
b. The government can 1) create new property forms to handle externalities, 2) tax the production of goods that have negative externalities, or 3) pass legislation (such as pollution controls) that reduces
production of these goods or reduces the externalities associated with them.
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Assume that average labor productivity is the same in each country. Based on the information in the table, which country has the highest real GDP per capita?CountryPopulation (millions)Share of Population Employed (%)A10060B15055C7550D25045E9540
A. Country A B. Country B C. Country C D. Country D
The main reason Sears Roebuck became the largest retailer in the United States during the late nineteenth century was that:
a. it reduced a host of transaction costs which allowed higher profits to shareholders and lower prices to customers. b. the railroad network improved substantially and charged higher rates for transporting goods. c. the lack of competition lowered the cost of advertising and increased profits for shareholders. d. his organization only interacted with the best wholesalers, distributors, and shippers in the business.
Politics enters into the determination of economic policy in a positive way because:
A. political decisions do not always reflect the will of society. B. it does not take market failures or failures of market outcome into account when formulating policy. C. political decisions always reflect the will of society. D. it takes market failures and failures of market outcome into account in formulating policy.
The use of marginal cost pricing in Figure 27.1 will result in
A. Only normal profits. B. Economic losses. C. Economic profits. D. A fair rate of return on invested capital.