Local governments provide law enforcement, which benefits society, but if the costs of law enforcement exceed the benefits, the result is a situation of
A. Government failure.
B. Efficiency as long as there is some benefit.
C. Market failure.
D. Public choice theory.
Answer: A
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Consider a situation in which a factory emits high levels of air pollution and the factory is not liable for the damages its pollution causes. According to the Coase theorem, government action is ________ to achieve an ________ amount of pollution
A) necessary; equitable B) not necessary; equitable C) necessary; efficient D) not necessary; efficient.
According to the quantity theory of money, inflation causes an increase in the money supply
Indicate whether the statement is true or false
Wealth is a flow measure.
Answer the following statement true (T) or false (F)
As the inventory of a firm falls
A. its social capital increases. B. its tangible capital decreases. C. its intangible capital decreases. D. there is no change in its capital.