A negative externality exists and government wants to impose a tax in order to bring about an efficient outcome. To accomplish its objective, government must set the tax equal to marginal
A. private cost.
B. social benefit.
C. external cost.
D. social cost.
E. external benefit.
Answer: C
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The basic purpose of economic models is to:
a. construct simplifying assumptions about the real world. b. explain reality in all its complexity. c. construct situations where controlled experiments can be carried out. d. provide explanations for, and predictions of the relationship between variables.
Most of the bank failures in the 1980s and 1990s occurred
a. in states that were rural and in states where the oil industry was important b. in states where there was a large level of new investment in commercial property c. in states with large urban populations such as New York, Michigan, and Pennsylvania d. because of mismanagement, having little to do with the state of the economy e. in states where the population was growing very slowly or actually declining
Which of the following is an example of a public good?
A) flood control B) post office C) health care D) welfare
Firms that produce an information product experience short-run economies of operation because
A. the firm will always produce in the decreasing portion of the marginal cost curve. B. of the U-shaped nature of the average total cost curve. C. the average total cost of producing and selling the product declines as output increases. D. of the U-shaped nature of the average variable cost curve.