In a "second-best" world
A. tariffs are economically optimal.
B. private actions are dictated by government agencies.
C. private actions do not lead to the best possible outcomes for society.
D. social marginal cost of a transaction equals social marginal benefit.
Answer: C
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The low point of the Great Depression was reached in the year
A. 1929. B. 1931. C. 1933. D. 1935.
Refer to the graph shown that depicts a third-party payer market for prescription drugs. What happens to expenditures by consumers in this market if a $2 co-pay is established compared to a free-market equilibrium?
A. Expenditures rise by $90 B. Expenditures remain at $150 C. Expenditures fall by $120 D. Expenditures fall by $30
When demand shocks lead to recessions, it is mainly due to:
A. price inflexibility. B. the inability of government policy to affect demand. C. unexpected changes in the supply of goods and services. D. government regulations that prevent firms from adjusting output in response to the shocks.
The principal economic cost of growth is:
A. higher interest rates B. higher inflation rates C. higher unemployment rates D. consumption sacrificed for capital formation