When private costs equal social costs, it means that:
A. negative externalities are not present in the market.
B. positive externalities are present in the market.
C. the external cost must be small relative to the private cost in the market.
D. no externality of any kind is present in the market.
A. negative externalities are not present in the market.
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A grower of commercial Christmas trees can raise blue spruce and Douglas fir. Therefore, an increase in the expected market price of Douglas firs tends to
A) reduce the planting of Douglas firs. B) reduce the planting of blue spruce trees. C) increase the cost of planting Douglas firs. D) do none of the above.
What is the equilibrium wage and level of employment under monopsony?
a. W1 and E1 b. W2 and E0 c. W0 and E0 d. W0 and E1 e. W0 and E2
Suppose the market-equilibrium quantity of good x is 5,000 units and the socially-optimal quantity of good x is 4,000 units. Then
a. the production of good x imposes external costs on society. b. the private value of good x exceeds the private cost of good x when 5,000 units are produced. c. the private cost of good x exceeds the private value of good x when 5,000 units are produced. d. the social cost of good x exceeds the private value of good x when 4,000 units are produced.
Exhibit 5-10 GDP data (billions of dollars) Indirect business taxes$ 600 Depreciation950 Change in business inventories50 Compensation of employees5,400 Corporate profits700 Durable goods600 Exports100 Social Security taxes360 Transfer payments300 Fixed investment950 Government spending800 Imports150 Net interest500 Nondurable goods2,000 Personal taxes1,000 Rental income200 Services4,000 In Exhibit 5-10, and using the income approach, GDP equals
A. $8,350 billion. B. $9,710 billion. C. $5,400 billion. D. $8,400 billion.