If an external benefit is present in the consumption of a good or service, then
A) there can be no external cost.
B) the marginal social benefit is greater than the marginal private benefit.
C) the marginal social benefit is equal to the marginal private benefit.
D) the marginal private benefit is equal to the marginal social benefit plus the marginal external benefit.
E) the marginal external benefit is equal to the marginal private benefit minus the marginal social benefit.
B
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What is the cost-minimizing equilibrium condition?
What will be an ideal response?
Which of the following is a characteristic of perfect competition?
a. Individual firms have the power to set prices. b. Firms produce differentiated products. c. New firms can easily enter the market. d. There are only a few very large firms producing all output in the market.
Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia
produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by a. 15 blankets and 35 meals. b. 25 blankets and 40 meals. c. 35 blankets and 45 meals. d. 50 blankets and 80 meals.
When someone does not have to pay for a good it:
A. means there is zero demand for the good. B. is rational to overconsume. C. is rational to underconsume. D. is irrational to overconsume.