Why are people willing to pay more for a diamond than for a bottle of water?
What will be an ideal response?
The marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water.
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As more people started building houses in your community, more street lights were installed in your locality making it safer and easier to drive through. This is an example of a(n) ________
A) pecuniary externality B) network externality C) moral hazard D) adverse selection
The prohibitive tariff is a tariff that
A) is so high that it eliminates imports. B) is so high that it causes undue harm to trade-partner economies. C) is so high that it causes undue harm to import competing sectors. D) is so low that the government prohibits its use since it would lose an important revenue source. E) is so low that it causes domestic producers to leave the industry.
The winner-take-all aspect of patent awards elicits a socially optimal research effort
Indicate whether the statement is true or false
A country’s comparative advantage can be illustrated by the graph of the production possibilities frontier.
Answer the following statement true (T) or false (F)