In the case of a positive externality, in order to achieve efficiency the government must set the _________________ equal to the marginal ____________________.
A. tax; external costs
B. tax; external benefits
C. subsidy; external costs
D. subsidy; external benefits
E. subsidy; private costs
Answer: D
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An oligopolist’s effective demand curve will be kinked if the firm
A. is acting as a price leader in the industry. B. expects other firms to match price cuts but not price increases. C. expects other firms to match all price changes. D. fears new entry into the industry.
The nonrivalrous character of technological ideas suggests that ________
A) patent law protection is ultimately inefficient B) technological change follows a logarithmic pattern C) technology developed in one industry, e.g. the vodka industry, cannot be used in another industry, e.g. the automobile industry D) ideas can be used over and over again
CEOs must create value for shareholders to be successful
Indicate whether the statement is true or false
The legal requirement that commercial banks hold reserves equal to some fraction of their deposits
a. limits the ability of banks to expand the money supply by extending additional loans. b. prevents the Fed from controlling the money supply since commercial banks can always offset the actions of the Fed. c. prevents runs on banks by depositors who fear that banks have insufficient assets to meet the claims of their depositors. d. limits the ability of the Treasury to expand the national debt.