According to the Coase theorem, under which conditions can private parties solve the problem of externalities?
a) if the cost of bargaining is small
b) if the initial distribution of rights favours the person being adversely affected by the externality
c) if the number of parties involved is sufficiently large
d) if the number of parties involved is sufficiently small
Ans: a) if the cost of bargaining is small
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What do Keynesian economists believe that the expenditure multiplier is?
a. Less than one b. Equal to one c. Greater than one d. Can be greater or less than one
The determinants of the market supply of labor include all of the following except
A. The market wage rate. B. Prices of consumer goods. C. Taxes. D. Income and wealth.
Which tool results in an immediate and major impact on the money supply, but is rarely used by the Fed because it affects the money supply in such a significant way?
a. open market operations b. reserve requirement alterations c. reserve interest rate changes d. discount rate changes
Suppose that the market for candy canes operates under conditions of perfect competition, that it is initially in long-run equilibrium, and that the price of each candy cane is $0.10. Now suppose that the price of sugar rises, increasing the marginal and average total cost of producing candy canes by $0.05; there are no other changes in production costs. Based on the information given, we can conclude that in the long run we will observe:
Select one: A. neither entry nor exit from the industry. B. firms leaving the industry. C. firms entering the industry. D. some firms entering and some firms leaving.