Under a Coase bargaining solution, deal making between the two parties continues until the marginal ________ to the harmed party equals the marginal ________ to the other party.
A. benefit; benefit
B. benefit; cost
C. cost; benefit
D. cost; cost
Answer: B
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Assume that a firm's marginal revenue just barely exceeds marginal cost. Under these conditions the firm should:
a. expand output. b. contract output. c. maintain output. d. There is insufficient information to answer the question.
If a country is running a current account deficit year after year, what should we expect to happen to the exchange rate for that country? Explain.
What will be an ideal response?
By subsidizing the provision of public education, the government
A) generates an increase in the quantity of educational services demanded. B) pushes the per-unit price that consumers pay for educational services below the market clearing price. C) pushes the per-unit price that producers of educational services receive above the market clearing price. D) all of the above.
If the Fed raises its target for the federal fund rate, this indicates that
A) the Fed is pursuing an expansionary monetary policy. B) the Fed is attempting to combat deflation. C) the Fed is pursuing a contractionary monetary policy. D) The Fed is concerned that the growth in aggregate demand is too slow to keep up with potential GDP.