Answer the following questions true (T) or false (F)
1. When there is a positive externality in a free market, too much of the good is produced and consumed.
2. When there is a negative externality, the competitive output is greater than the economically efficient output level.
3. The marginal social cost of a good or service is the cost borne by the producer.
1. FALSE
2. TRUE
3. FALSE
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What is an aggregate demand curve
a. The demand of an individual with respect to price b. The total demand of the market with respect to price of a good c. The preference of an individual in the market d. None of the above
An expansionary gap in the short-run results in: a. lower resource prices in the long run. b. unemployment in the long run
c. a recessionary gap in the long run. d. cost-push inflation in the long run. e. demand-pull inflation in the long run.
The creation of new property forms (such as privatizing a public beach) is one answer to __________ because it would reduce _________
a. government failure; market failure b. market failure; government failure c. the creation of third parties; public choice d. dealing with externalities; the number of third parties e. the inefficiencies of the market; special interests
Government licensing, patents, and government franchising are all examples of
A. economies of scale. B. economies of being established. C. legal barriers to entry. D. control of an essential resource.