A positive externality causes
A) the marginal social benefit to be less than the marginal private cost of the last unit produced.
B) the marginal private benefit to exceed the marginal social cost of the last unit produced.
C) the marginal social benefit to exceed the marginal private cost of the last unit produced.
D) the marginal social benefit to be equal to the marginal private cost of the last unit produced.
C
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Refer to the table below. Suppose the profit for each unit of paper product is $2.00 and the profit for each unit of lumber is $5 and Big Oaks is producing the profit-maximizing quantity of lumber and paper products. If the profit from each unit of paper product increases from $2 to $3 and the profit for each unit of lumber does not change, to maximize profit, Big Oaks should produce a ________
proportion of paper products and produce ________ units of paper products and lumber.
Big Oaks can produce either paper products or lumber with each tree that they harvest. Because Big Oaks can adjust the amount of paper products and lumber they produce from the harvested trees, paper products and lumber are produced in variable proportions. The above table summarizes Big Oaks production possibilities from each harvested tree.
A) smaller; less
B) smaller; more
C) greater; less
D) greater; more
A business owner applies for a bank loan to launch a fairly low-risk project. After receiving the loan, she cancels the low-risk project and instead uses the borrowed funds for a high-risk venture. This is an example of
A) financial intermediation. B) the transactions approach. C) moral hazard. D) capital controls.
Under current federal antipoverty programs,
A. economic equality is promoted at the least possible cost in economic efficiency. B. a family’s benefits do not depend on its earnings from work. C. a family’s total income (cash and in-kind benefits) may actually fall if its earnings from work rise. D. families with children are entitled to no more assistance than families without children.
The exchange rate for a foreign currency that is determined by supply and demand is
A) a fixed exchange rate. B) a controlled exchange rate. C) a constrained exchange rate. D) a flexible exchange rate.