Negative externalities lead to over supply in a market
Indicate whether the statement is true or false
True
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Goodyear produces tires for automobiles, 50,000 in all. Suppose 40,000 go on new cars and are sold as part of each car, while the other 10,000 are produced as replacement tires and are sold individually. How many tires would be counted in current GDP?
a. 50,000 . because everything produced is counted b. 40,000 because only the ones on new cars are counted c. 10,000 because 40,000 will be counted in the value of the new cars d. 0 because they are all intermediate goods e. 10,000 because they are the only "final" goods and services in the total
Figure 8.7 shows the market for a successful price-fixing arrangement (cartel) between two identical firms. When the two firms act like one and charge the same price, the market price will be ________ and each firm will produce and sell a quantity of ________.
A. $10; 200 B. $10; 100 C. $5; 500 D. $5; 250
A nation's foreign exchange reserves consist mainly of
A) excess reserves held by its banks. B) government securities of that nation. C) the legal currency of that nation. D) currencies of other nations.
When firms earn below normal rates of return
A. they raise their prices to increase their profits. B. they tend to leave the industry and seek profits elsewhere. C. they tend to stay in the industry in anticipation of other firms leaving the industry. D. they are still breaking even economically.