A benevolent social planner would prefer that the output of good x be increased from its current level if, at the current level of output of good x,
a. social value = private value = private cost < social cost.
b. social cost > private value = social value > private cost.
c. social cost = private cost = private value < social value.
d. social value = private cost = social cost > private value.
c
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Use the following graph to answer the next question.
If the federal funds market is at equilibrium at point C and the Federal Reserve decides to conduct an open-market sale, then it must be trying to set a ________.
A. lower target federal funds rate by increasing the amount of reserves in the market B. higher target federal funds rate by increasing the amount of reserves in the market C. higher target federal funds rate by reducing the amount of reserves in the market D. lower target federal funds rate by reducing the amount of reserves in the market
Which statement best describes social surplus?
a. the sum of consumer surplus and producer surplus b. the amount that a seller is paid for a good minus the seller’s actual cost c. the amount that individuals would have been willing to pay, minus the amount that they actually paid d. when it is impossible to improve the situation of one party without imposing a cost on another
If the Fed buys a U.S. Treasury bill from a member of the public, the banking system has
a. less reserves and the money supply tends to fall. b. more reserves and the money supply tends to fall. c. less reserves and the money supply tends to grow. d. more reserves and the money supply tends to grow.
Which one of the following statements regarding transferable pollution permits is false?
a. An equilibrium permit price will be obtained through the trading of permits b. Polluting firms generally prefer emissions standards to a system of tradable permits c. A system of tradable permits was set up under the 1990 Clean Air Act Amendments d. A system of tradable permits could be used to help reduce carbon dioxide emissions e. A system of tradable permits achieves a given level of pollution reduction at the lowest cost