When negative externalities are present in a market, it means that:
A. private costs are less than social costs.
B. private costs are less than external costs.
C. social costs are less than external costs.
D. external costs are equal to social costs.
A. private costs are less than social costs.
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What is the difference between willingness to accept and willingness to pay? For a trade to take place, does the willingness to accept have to be lower, higher, or equal to the willingness to pay?
What will be an ideal response?
If a good is produced by firms that generate external costs, the price consumers pay
A. will be efficient as long as it equals the marginal costs of the firms. B. will be too low. C. will be the correct price, but the quantity sold of the good will be too large. D. will be too high because the consumers end up paying the costs instead of the firm.
A(n) ________ in U.S. prices will cause a decrease in the demand for U.S. dollars and a(n) ________ in the (per dollar) exchange rate
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
Are the wages of the pilots marginal costs or sunk costs to an airline trying to decide whether to add a late-night flight from Seattle to San Francisco? They are
A) marginal costs because pilots are indispensable to the flight. B) sunk costs if the pilots will receive no additional compensation for the flight. C) marginal costs because they will be paid after the flight rather than before. D) sunk costs because pilots' wage rates are determined by a contract already existing.