Refer to the diagram in which S is the market supply curve and S 1 is a supply curve comprising all costs of production, including external costs. Assume that the number of people affected by these external costs is large. Without government
interference, this market will reach:
A. an optimal allocation of society's resources.
B. an underallocation of resources to this product.
C. an overallocation of resources to this product.
D. a higher price than is consistent with an optimal allocation of resources.
C. an overallocation of resources to this product.
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Explain the law of supply. What does the law of supply imply about the shape of the supply curve?
What will be an ideal response?
Full employment, which is always expected to occur, consists of the frictionally and cyclically unemployed
a. True b. False Indicate whether the statement is true or false
The argument against greater equality in the distribution of income in the United States hinges predominantly on
A. Loss of incentives. B. The loss of horizontal equity. C. A higher marginal revenue product. D. Greater productivity.
A British inventor sells a patent to a U.S. corporation for $25,000. If the U.S. financial account remains unchanged, ________.
A. the U.S. price level will fall and the unemployment rate will rise B. the U.S. price level will rise and the unemployment rate will fall C. both the U.S. price level and unemployment rate will rise D. both the U.S. price level and unemployment rate will fall