The free-rider problem arises
A. when people realize they will still receive the benefits of a good whether they pay for it or not.
B. when people feel their contribution is so small relative to the total amount needed that it won't make a difference whether they contribute or not.
C. whenever the government produces a good or service.
D. whenever there is a surplus of the product in the market.
Answer: A
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Whether or not people have identical tastes, the net value that the marginal user receives from a common property is
a. positive. b. zero. c. negative. d. uncertain.
Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good. Calculate the price elasticity of supply and characterize the product
A) 2; The product is elastic. B) 0.5; The product is inelastic. C) 0.2; The product is inelastic. D) 50%; The product is inelastic.
Say a firm that sells its product at a price of $20 is using 20 units of labor. If the marginal product of the last unit of labor hired was 10, and the firm pays each worker a wage of $40, then this firm should
A. hire more workers. B. keep the same number of workers. C. decrease the number of workers. D. decrease its output.
The entry of firms into a market
A. Reduces the profits of existing firms in the market. B. Shifts the market supply curve to the left. C. Shifts the market demand curve to the left. D. Increases the equilibrium price.