Which of the following would be classified as an external cost?
A. You are not able to study at night because there is so much noise coming from the dorm room next to yours.
B. As more firms began hiring computer programmers, the salaries of computer programmers increased, and therefore the firm's cost of production increased.
C. A private firm will not provide national defense, as it is impossible to confine the benefits to only those individuals who have paid for it.
D. When you purchase a prescription drug, you are not made fully aware of all the possible side effects that may result from taking the drug.
Answer: A
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Refer to Figure 12-9. At price P1, the firm would produce
A) Q1 units B) Q3 units. C) Q5 units. D) zero units.
The middle class in China:
A. outnumbers the entire population of the United States. B. is almost equal in size to the entire population of the California. C. is about half the size of the population of the Germany. D. None of these is true.
When the federal government installs a price support program that requires the government to purchase all of a good not bought in the private economy at the support price, changes in producer surplus
A) are negative. B) are positive, but more than offset by the cost to consumers and the government. C) are positive, and not offset by the cost to consumers and the government. D) and consumer surplus are both positive.
The residents of Ireland earn $200 million of income from abroad. Residents of other countries earn $300 million in Ireland. Therefore, Ireland's
a. net factor payments from abroad are positive, and its GDP is larger than its GNP. b. net factor payments from abroad are positive, and its GNP is larger than its GDP. c. net factor payments from abroad are negative, and its GDP is larger than its GNP. d. net factor payments from abroad are negative, and its GNP is larger than its GDP.