In the case of a negative externality, the socially optimal output naturally exists if
A. the external costs associated with the negative externality are extremely small.
B. the external costs divided by price is equal to price divided by marginal private cost.
C. there are no free riders.
D. the public good aspects of the negative externality outweigh the costs incurred by the negative externality.
E. none of the above
Answer: E
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Which of the following observations is true?
A. In the long run, more costs become variable. B. Fixed costs cannot be completely varied if the time period is sufficiently long. C. Fixed costs arise when some types of inputs can be bought only in big batches. D. Variable costs arise when inputs have a large productive capacity.
If an increase in the price of Good A causes an increase in the demand for Good B, Goods A and B are said to be complements
a. True b. False Indicate whether the statement is true or false
Compared to stockholders, bondholders
a. face greater risk b. face the same risk c. face lower risk d. always receive a higher return on their investment e. always receive a lower return on their investment
Suppose that Milton likes to consume one glass of milk with every three chocolate chip cookies. For Milton, an additional cookie has no value unless he can consume it with the appropriate proportion of milk. Milton's indifference curves for milk and cookies are
a. right angles. b. bowed inward. c. bowed outward. d. downward-sloping straight lines.