What will a market that experiences a positive externality also experience?
a) a greater market output and lower market price than is optimal
b) a smaller market output and lower market price than is optimal
c) a smaller market output and a higher market price than is optimal
d) a greater market output and higher market price than is optimal
Ans: b) a smaller market output and lower market price than is optimal
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When protection is encouraged to protect a growing domestic industry; which of the following is being used?
A) Anti-dumping argument B) Save domestic jobs argument C) National security argument D) Infant-industry argument E) Diversity and stability argument
Does the law of diminishing returns apply to capital as well as labor? Explain why or why not
What will be an ideal response?
Answer the following statements true (T) or false (F)
1. Only in developing nations would one expect the value of either exports or imports to exceed 200 percent of gross national product. 2. In dollar value, the United States is the largest importer in the world. 3. The value of U.S. exports is about 10 percent of its GDP. 4. Although political arguments strongly favor free trade, most decisions affecting international trade are made in the economic arena. 5. The only factor determining whether a country can develop a comparative advantage in production is the degree to which it has a highly skilled labor force.
Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs. Which of the following is not correct? The tax would
a. shift the demand curve downward by 25 cents. b. lower the equilibrium price by 25 cents. c. reduce the equilibrium quantity. d. discourage market activity.