When there is reason to think that the existing structure of incentives will cause individuals in the market to act in ways that are inconsistent with ideal economic efficiency, economists say that
a. market failure is present.
b. democratic political decision-making will lead to the ideal efficient outcome.
c. government action, however well intended, cannot improve the situation.
d. government failure is present.
A
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Assume that the market for consumer gasoline is perfectly competitive. When one additional seller (gas station) enters the market,
A) then at least one other seller must exit the market. B) the price of gasoline increases. C) the price of gasoline is left unaffected. D) the price of gasoline decreases. E) None of the above is correct.
Automatic stabilizers dampen economic fluctuations during recessions because ________ decrease while ________ increase
A) tax revenues; tax payments B) tax payments; transfer payments C) tax payments; tax revenues D) unemployment rates; inflation rates
If the elasticity of supply of a good is zero, then its
A) supply curve is vertical. B) supply curve is horizontal. C) demand curve must be vertical. D) supply curve is positively sloped.
Firms have started to use ____ to solicit information about event that are important to them
A) internal markets B) external networks C) prediction markets D) none of these choices.