According to Pigovian analysis, when is a tax necessary to improve the market's economic efficiency?
a. When high transactions costs prevent private bargaining.
b. When the social marginal cost of production exceeds the private marginal cost.
c. When consumption of the good creates external benefits for others.
d. When at the competitive equilibrium, the social marginal benefit of the good equals its social marginal cost.
b. When the social marginal cost of production exceeds the private marginal cost.
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Asymmetric information contributes to
A) the adverse selection problem. B) the moral hazard problem. C) both the adverse selection problem and the moral hazard problem. D) neither the adverse selection problem nor the moral hazard problem.
Which of the following holds true at the chosen level of output in the long run for firms in a perfectly competitive market?
A. P > MC B. P = minimum AVC C. MR = MC D. MR > MC
In international trade, dumping refers to
a. producing a lower quality good for export than what is produced for domestic consumption b. selling an export at a higher price than its price to domestic consumers c. selling an export at a price below its cost of production d. producing a lower quality good for domestic consumption than for export e. paying workers below subsistence wages
Suppose that everyone prefers to live in a society without poverty. Further suppose that some private charities are successful in reducing poverty. People who do not contribute to the charities
a. receive no external benefit from private antipoverty programs. b. decrease the reliance of individuals on antipoverty programs. c. can free ride on the generosity of others. d. are most likely to be in favor of government-sponsored programs.