The free rider problem occurs because:
a. it is easy to exclude others from consuming a good.
b. consumption is rivalrous, so the consumption of a product by one individual diminishes the amount available for others.
c. exclusion is costly or impossible, so a consumer or producer can use a good without having to pay for it.
d. external costs are imposed on others not directly involved in the transaction.
e. individuals are not required to pay for those goods which do not yield any utility to them.
c
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Consider the following:
(i) Suppose labor and capital are complements in production. Explain why a firm's long-run demand for labor is more elastic than its short-run demand. (ii) Suppose labor and capital are substitutes in production. Will the firm's long-run demand for labor still be more elastic than its short-run demand? Why or why not?
In a world of certainty about future demand and supply, speculators cause price fluctuations across time to decrease.
Answer the following statement true (T) or false (F)
A liquidity trap occurs when the
a. LM curve is steep. b. LM curve is vertical. c. LM curve is relatively flat. d. IS curve is flat.
The supply-side economists expect that a cut in the marginal income tax rate, with lost revenues made up by a cut in government spending, would
a. increase output. b. decrease output. c. leave output unchanged. d. affect output but the direction of the effect is uncertain.