All externalities:
A. create either a cost or benefit to a person other than the person who caused it.
B. are harmful to society and create costs external to the decision maker.
C. are addressed by the government through taxation.
D. are beneficial to society and create benefits external to the decision maker.
Answer: A
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Game theory may be used to solve problems of interdependent decision making by large firms.
Answer the following statement true (T) or false (F)
Suppose the price of eggs decreases from $2 per egg to $1.50 per egg. Due to this decrease in price, the ____ will increase
a. producer surplus b. consumer surplus c. opportunity cost of producing an egg d. social marginal cost
Most economists believe that there are positive externalities in education. One can conclude that a free market would fail to give the socially optimal outcome because the equilibrium:
A. price and quantity would be too high. B. price would be too low and quantity would be too high. C. price and quantity would be too low. D. price would be too high and quantity would be too low.
Market structure is determined by the
A. Price charged for the good or service produced. B. Amount of compensation given to the CEOs. C. Annual revenue, costs, and profits for an industry. D. Number and relative size of the firms in an industry.