In a market where a positive externality is present, the effect of a government subsidy would be to ensure:
A. an efficient outcome.
B. that those who enjoy the benefit receive the surplus.
C. a more fair distribution of surplus.
D. All of these statements are true.
Answer: A
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Spending on items other than consumption represents about what percent of total output of goods and services?
A. 20 percent B. 30 percent C. 40 percent D. 60 percent
In the long run, perfectly competitive firms make zero economic profit. This result is due mainly to which of the following assumptions?
A) few buyers and sellers B) unrestricted entry and exit C) firms must act as price takers D) demand for the firm's output is perfectly elastic
Why does a monopoly cause a deadweight loss?
A) because it does not produce some output for which demand exceeds supply B) because it increases producer surplus at the expense of consumer surplus C) because it appropriates a portion of consumer surplus for itself D) because it does not produce some output for which marginal benefit exceeds marginal cost
The behavior of an individual perfectly competitive firm has a perceptible influence on the market price
a. True b. False Indicate whether the statement is true or false