When externalities cause markets to be inefficient,
a. government action is always needed to solve the problem.
b. private solutions can be developed to solve the problem.
c. given enough time, externalities can be solved through normal market adjustments.
d. there is no way to eliminate the problem of externalities in a market.
b
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Financial innovations may be expected to cause a decline in ________
A) financial frictions B) the credit spread C) the real interest rate on investments D) all of the above E) none of the above
Corn and soybeans are alternatives that could be grown by most farmers. If government subsidies for ethanol lead to higher corn prices, this will
a. increase the supply of corn. b. increase the supply of soybeans. c. decrease the supply of soybeans. d. decrease the supply of corn. e. have no effect on the supplies of corn and soybeans.
If there are 1,000 people, each of whom owns a $100,000 house, and they each stand a 1/1,000 chance each year of suffering a fire that will totally destroy their house, what is the minimum that they would have to pay annually for fire insurance?
What will be an ideal response?
A supply schedule is characterized by which of the following?
(A) It shows the quantity supplied at only one price. (B) It lists supply for a specific good. (C) It is sensitive to changes in the costs of labor and parts. (D) It shows the factors that could influence supply.