When the social costs exceed the private costs, economists state that there is
A) a positive externality.
B) an underproduction of output.
C) a negative externality.
D) a waste of resources in production.
Answer: C
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The Rand Corporation estimates that the external costs imposed by alcohol consumption (for example, deaths caused by drunk drivers) to be 48 cents per ounce consumed. Taxes on alcohol amount to 23 cents per ounce consumed. This information suggests: (i) alcohol is overconsumed; (ii) alcohol taxes should be raised. Which of these statements is correct?
a. i and ii b. i not ii c. ii not i d. neither i nor ii
If the Fed sells a U.S. Treasury bill to a member of the public, the banking system has
a. less reserves and the money supply tends to fall. b. more reserves and the money supply tends to fall. c. less reserves and the money supply tends to grow. d. more reserves and the money supply tends to grow.
An increase in the level of U.S. exports ________ the demand for goods and service produced in the United States
A) increases B) does not affect C) decreases D) increases or decreases
Economic growth at constant world prices will ________ cause the output of one good to fall absolutely
A) never B) sometimes C) always