Most economists believe that there are positive externalities in education. One can conclude that a free market would fail to give the socially optimal outcome because the equilibrium:
A. price and quantity would be too high.
B. price would be too low and quantity would be too high.
C. price and quantity would be too low.
D. price would be too high and quantity would be too low.
Answer: D
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Economics teaches us that
a. every choice has costs associated with it because resources are scarce. b. if all resources were abundant there would be no need to economize or to agonize over decisions. c. judgements have to be made as to the best means to obtain a desired objective. d. All of the above.
A monopolist with constant average and marginal cost equal to 8 (AC = MC = 8) faces demand Q = 100 - P, implying that its marginal revenue is MR = 100 - 2Q. Its profit maximizing quantity is
a. 8 b. 46 c. 50 d. 92
When comparing tax and spending policy by the government, in general we note that the tax policy multiplier effect relative to the spending multiplier should be:
A. larger. B. smaller. C. equivalent. D. not comparable.
If the marginal private cost of producing one kilowatt of power in California equals five cents and the marginal social cost of each kilowatt equals nine cents, then the marginal external cost equals ________ per kilowatt
A) five cents B) nine cents C) four cents D) fourteen cents