Most economists believe that there are positive externalities in education. One can conclude that a free market would fail to give the socially optimal outcome because in comparison to the socially optimal (efficient) equilibrium, the inefficient equilibrium
A. price and quantity would be too high.
B. price would be too low and quantity would be too high.
C. price and quantity would be too low.
D. price would be too high and quantity would be too low.
Answer: C
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According to economists Robert Lucas and Thomas Sargent, the apparent short-run trade-off between unemployment and inflation in the 1950s and 1960s was the result of
A) unexpected changes in fiscal policy. B) unexpected changes in monetary policy. C) expected changes in monetary policy. D) expected changes in fiscal policy.
In a monopsonistic labor market, workers are paid a wage:
a. below their MRP. b. equal to the intersection of MRP and S. c. equal to the MFC. d. equal to the price of the output. e. above their MFC.
The following table shows Jay's estimated annual benefits of holding different amounts of money.Average moneyholdings($)Total benefit($)1002020029300664004150044How much money will Jay hold if the nominal interest rate is 6 percent? (Assume he wants his money holdings to be in multiples of $100.)
A. $100 B. $400 C. $300 D. $200
In 1991, the base year, you were earning $350/week. Your wages rose to $450 in 2000, the current year, when the Consumer Price Index stood at 135. What statement can you make about what happened to your real wages over this period?
A. They rose. B. They fell. C. They remained the same. D. There is not enough information to determine whether they rose, fell, or remained the same.