When there are positive externalities associated with the consumption of a good, we can expect the market:
A. demand curve to lie above the social demand curve.
B. demand curve to lie below the social demand curve.
C. supply curve to lie above the social supply curve.
D. supply curve to lie below the social supply curve.
Answer: B
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Adam Smith's idea of the "invisible hand" says that given a country's resources and its initial distribution of wealth, the use of markets will
A) insulate a nation from the effects of political instability. B) eliminate problems of hunger and dissatisfaction. C) eliminate inequalities between the rich and the poor. D) make people as economically well off as possible.
Two key properties of indifference curves are that an indifference curve slopes
A) upward and is bowed out from the origin. B) downward and is bowed out from the origin. C) upward and is bowed in toward the origin. D) downward and is bowed in toward the origin.
Scatterbrain Samantha often forgets to lock her house. This has caused the probability of a burglary to be 30%. If her house gets broken into, she faces a property loss of $10,000, otherwise she gets to keep her $100,000 . If Samantha is offered full coverage for her house at $1,500, what is her expected wealth with the insurance policy?
a. $80,000 b. $87,000 c. $97,000 d. $98,500
The rational expectations theory claims that workers and firms will not make systematic errors when they forecast inflation
a. True b. False Indicate whether the statement is true or false