When a paper producer pollutes the air, economists argue that there is
A) efficiency, if production is at its maximum level.
B) a positive externality.
C) an external cost.
D) a cost paid solely by the firm.
C
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In the long run, the level of output depends on the price level
Indicate whether the statement is true or false
Economic theory indicates that the behavior of
a. government employees differs from the behavior of employees in the private sector because government employees generally disregard their own personal self-interest when making decisions. b. elected public officials differs from the behavior of all other individuals in society because they are not influenced by private interests. c. individuals when they make decisions about who to vote for is very different from the behavior of these same individuals when they make other types of choices. d. voters, government employees, and public officials is best understood by applying the same basic principle we use to predict the behavior of people in the private sector--that incentives matter.
Suppose that Bieber and Rihanna are duopolists in the music industry. In May, they agree to work together as a monopolist, charging the monopoly price for their music and producing the monopoly quantity of songs. By June, each singer is considering breaking the agreement. What would you expect to happen next?
a. Bieber and Rihanna will determine that it is in each singer's self interest to maintain the agreement. b. Bieber and Rihanna will each break the agreement. Both singers' profits will decrease. c. Bieber and Rihanna will each break the agreement. Both singers' profits will increase. d. Bieber and Rihanna will each break the agreement. The new equilibrium quantity of songs will increase, and the new equilibrium price also will increase.
The market system corrects a shortage by:
a. Raising product price to decrease production b. Lowering product price to increase production c. Raising product price to increase production d. Lowering product price to decrease production