There is no market failure if
A. the marginal private cost curve is upward sloping.
B. the demand curve (for a good or service) is downward sloping.
C. the demand curve lies about the marginal private cost curve.
D. marginal private costs are greater than the external costs associated with a negative externality.
E. none of the above
Answer: E
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Consider a perfectly competitive firm with MC = 10 + q. If market demand is Q = 100 - P and the current industry output is 80 units, then the firm will produce
a. zero units. b. 10 units. c. 20 units. d. the answer cannot be determined without knowing what the supply curve is.
The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
An example of automatic fiscal policy is
A) an interest rate cut, initiated by an act of Congress. B) an increase in the quantity of money. C) a tax cut, initiated by an act of Congress. D) a decrease in tax revenues, triggered by the state of the economy. E) any change in the interest rate, regardless of its cause.
Explain the economic concept of opportunity cost
What will be an ideal response?