Suppose the production of a good results in positive externalities. If output occurs at the intersection of the marginal social benefits curve and the supply curve, then
A. output will be at the socially optimal level.
B. the price of the product will be the same as it was when all benefits were not taken into account.
C. more output will be produced than if all benefits were not taken into account.
D. a and c
E. a, b, and c
Answer: D
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How does elasticity of supply differ for a product that can be stored, compared to a product that cannot be stored?
What will be an ideal response?
When economists refer to the role of money as a standard of deferred payment, they mean that
A) payments by checks are usually deferred until the checks clear the bank. B) money earns interest while loan payments are deferred. C) money provides a standard for payments that will occur in the future. D) money today is worth less than money tomorrow.
Johnson's Piggery is the only employer in town. Johnson employs 500 workers and pays them each a wage of $8 . The MRP of the 500th worker is $10 . Johnson's return to monopsony power is
a. 2 percent b. equal to the marginal labor cost c. $4,000 d. $9 e. $1,000
Which of the following is not generally considered a failing of market economies?
A. Market economies can have severe swings from boom to bust. B. Market economies tend to underprovide public goods. C. Market economies tend to promote equity at the expense of efficiency. D. Market economies can misallocate resources when property rights are ill defined.