The similarity between markets for common resources and markets with externalities is that:
A. the equilibrium quantity is too high in terms of society.
B. the price that competitive firms charge does not capture the true costs and benefits of consumption.
C. government involvement is needed to reach an efficient outcome.
D. generally we get an oversupply at market.
B. the price that competitive firms charge does not capture the true costs and benefits of consumption.
You might also like to view...
What is the difference between the Current Population Survey and the establishment survey? What are the major drawbacks for each of these measures of unemployment?
What will be an ideal response?
If a revenue-maximizing firm is told that the price elasticity of demand is equal to one, it should:
a. raise prices 1 percent. b. lower prices 1 percent. c. raise prices until the elasticity becomes very high. d. keep the price where it is. e. lower prices until the elasticity becomes very high.
Figure 16-1
In Figure 16-1, there are four levels of income. G is government expenditures and TT is taxes less transfers. Y3 is the full-employment level of income. At Y3
a.
there is an official deficit but a structural budget balance.
b.
there is a structural deficit but an official budget surplus.
c.
the official and structural deficit are in balance.
d.
both the official and structural budgets show a deficit.
In the Keynesian framework, most short-run fluctuations in GDP are due to:
a. changes in aggregate demand b. changes in the natural rate of unemployment c. changes in potential GDP d. changes in the unemployment insurance system