Because government bodies have the power to impose limits on how much of a resource is consumed:
A. it will always cause deadweight loss.
B. they decide what is the "right" amount for the public to consume.
C. it can be efficiency enhancing in markets for common resources.
D. they will often correct a market before testing the effectiveness of social norms to correct the problem.
Answer: C
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The largest component of GDP in the US is typically:
a. government purchases. b. social securtity. c. consumption. d. investment. e. net exports.
Savers have less incentive to care what their bank is doing with their money because their deposits are federally insured. This is a problem of
a. nominal interest b. adverse selection c. moral hazard d. the winner's curse e. a positive externality
According to monetarists, the main cause of change in the level prices are changes in
A. investment spending. B. the money supply. C. government budget deficits. D. taxes.
All of the following contribute to low investment spending in DVCs except:
A. low rates of saving. B. inadequacy of public capital goods (infrastructure). C. political instability. D. expensive labor.