What is the consequence of a positive externality in a market? What is the consequence of a negative externality? Why those consequences occur?
What will be an ideal response?
A positive externality leads to the equilibrium quantity of goods in a market that is less than the efficient amount from the society's perspective. A negative externality leads to the equilibrium quantity of goods in a market that is more than the efficient amount. A positive externality is not taken into account by consumers and hence is not reflected in the position of the market demand curve. This leads to an equilibrium market quantity below the socially preferred level. In contrast, a negative externality is not taken into account by producers and hence is not reflected in the position of the market supply curve. This leads to an equilibrium market quantity above the socially preferred level.
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People ________ their labor supply in response to a temporary decrease in government purchases because
A) increase; current or future taxes will decrease, making them financially better off. B) decrease; current or future taxes will decrease, making them financially better off. C) decrease; current or future taxes will increase, making them financially worse off. D) increase; current or future taxes will increase, making them financially worse off.
In the United States, the dollar was commodity backed:
A. until 1971. B. until the Civil War. C. Until financial crisis of 2008. D. until World War II.
The efficiency wage theory argues that the productivity of workers increases: a. when they are paid more
b. when they are provided on-the-job training. c. with age and experience. d. when they are allowed to participate in internal decision making.
If actual inflation is correctly expected and built into people's wage and price-setting decisions, the Phillips curve:
A. remains a downward sloping line. B. becomes a vertical line. C. becomes an upward sloping line. D. becomes a horizontal line.