Opportunity costs exist for
A. households but not businesses or governments.
B. businesses but not households or governments.
C. businesses and households but not governments.
D. households, businesses, and governments.
Answer: D
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Refer to A Negative Externality Problem. Suppose there are no transactions costs. Also suppose the externality is internalized when the damaged parties offer producers a bribe of $10 per unit to reduce their production. Coasian analysis indicates that social gain in this situation will equal
Demand for a good is given by Q = 100 - P. The private marginal cost of production is MCP = 10 + Q. There is a $10 per unit negative production externality in this situation. a. $0 b. $800 c. $1,600 d. $3,200
The ceteris paribus assumption is a behavioral assumption.
a. True b. False
As an economy's capital stock increases, the economy
A) generally experiences increased unemployment of other resources, such as labor. B) generally decides to engage in international trade. C) experiences economic growth. D) gains an absolute advantage in the production of capital goods.
According to classical economics,
a. the economy moves to full employment in the long run b. the economy is always at full employment in the short run c. the economy is rarely at full employment d. business cycles explain long-run fluctuations in the economy e. the economy is at full employment in the short run, but in the long run, business cycle movements lead the economy away from full employment