In what sense do externalities cause the "invisible hand" of the marketplace to fail?
a. Externalities lead to government intervention in markets, which exacerbates the problems associated with externalities.
b. Externalities result in prices that are too high for many consumers to pay.
c. Markets fail to produce the maximum total benefit to society when positive or negative externalities are present.
d. Markets produce too little of a good when positive or negative externalities are present.
c
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If two households have the same disposable income in the current year, the household with the
A) higher expected future income will consume a larger portion of its current income today. B) lower expected future income will consume more today while it has the money. C) lower expected future income will spend a larger portion of its current income on consumption today because it will increase its saving in the future. D) none of the above
Relative poverty refers to
A) how a family's income compares to the incomes of those around them. B) poverty levels at a stated income cutoff. C) the number of poor in one state relative to another. D) none of the above.
A basic characteristic of a command system is that:
a. Government owns most economic resources b. Wages paid to labor are higher c. Government planners play a limited role in deciding what goods will be produced d. Free markets are never permitted in a command economy
Remittances and backflows of experienced workers:
A. reduce the efficiency gains from migration. B. reverse wage equalization that occurred with the original migration. C. exacerbate the problem of "brain drain" from developing nations. D. redistribute gains toward the original emigrant nation.