Why don't people take into consideration the external costs of their actions and reduce the amount of externalities?
What will be an ideal response?
People have no incentive to take into consideration the external costs of their actions. Since their utility or income would be lower if they bore all the costs associated with their activities, most people will not do so voluntarily.
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A country produces only cans of soup and ink pens. If the country produces on its bowed outward PPF and increases the production of cans of soup, the opportunity cost of additional
A) cans of soup is decreasing. B) ink pens is increasing. C) cans of soup is increasing. D) cans of soup remains unchanged. E) More information is needed to determine what happens to the opportunity cost.
In the figure above, the economy is at an equilibrium with real GDP of $16 trillion and a price level of 110. As the economy moves toward its ultimate equilibrium, the ________ curve shifts ________ because ________
A) aggregate supply; leftward; the money wage rate rises B) aggregate supply; rightward; the money wage rate falls C) aggregate demand; rightward; the money wage rate falls D) aggregate demand; leftward; the money wage rate rises E) potential GDP; leftward; the money wage rate falls
Comparison of the European and U.S. labor markets suggests that
A) it is relatively cheap to hire workers in the United States. B) the U.S. labor market is more "flexible" than the European labor market. C) job security and income equality are greater in the European labor market. D) A and B. E) all of the above.
Monopolistic competition is similar to perfect competition for all of the following reasons except
A. both have many firms in each industry. B. both have identical demand and marginal revenue curves. C. both make zero economic profits in the long run. D. both maximize profits at the output level where marginal revenue equals marginal costs.