Refer to the above figure. S1 is the supply curve that includes only private costs. S2 is the supply curve that includes social costs. From this figure we know that
A) an external benefit exists.
B) private costs are less than social costs.
C) private costs equal social costs.
D) private costs are greater than social costs.
B
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Refer to the payoff matrix below. Which of the following is true for Bright Lights?
A) They do not have a dominant strategy.
B) Their pure strategy is to set a Low Price.
C) Their pure strategy is to set a High Price.
D) They do not have a pure strategy.
Which of the following might be a method that the government could use to promote the production of a good that generates positive externalities?
A) subsidies B) regulations C) financing additional production D) All of the above are correct.
Suppose domestic beef producers face demand of QD = 1000 - 5P. In the very short run 500 head of beef are produced. Suppose mad cow strikes a portion of the national herd and the amount brought to market falls to 400 . The price per head will rise by
a. 10 b. 30 c. 30 d. 50
In a market where the price is restricted by price floors or price ceilings,
a. all sellers will be able to sell everything they produce. b. surpluses and shortages will exist. c. all buyers will get what they want. d. disequilibrium will automatically correct itself. e. surpluses and shortages will put pressure on the price to move to its equilibrium.