Using Figure 4.1, suppose that point B represents the optimal mix of output for a society. If market forces cause society to produce and consume at point C, then
A. The forces of supply and demand will return society to point B.
B. There is government failure.
C. Points A and D are unattainable with the given resources and technology.
D. There is market failure.
Answer: D
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The Internet has created some special problems of intellectual property. One problem is that the
a. Internet is a monopoly, so the price of intellectual property exceeds marginal cost b. Internet market has not yet reached equilibrium c. property that can be downloaded, modified, and then re-sold d. marginal cost of enforcing property rights exceeds the marginal benefit e. price of intellectual property usually exceeds the marginal benefit
Which of the following is a fixed cost to farmer McDonald?
a. gasoline b. fertilizer c. insurance d. seed
Which of the following provides the best summary of the basic idea of public choice analysis?
a. Public choice analysis applies the principles of economics to political science topics. b. Public choice analysis takes the principles of political science and applies them to the traditional topics of economics. c. Public choice analysis uses the principle of majority rule to determine the efficiency of an action. d. Public choice analysis indicates there is a sharp distinction between economic and political topics.
To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where
a. MR = MC. b. MR intersects the demand curve. c. MC intersects the demand curve. d. MR exceeds MC by the greatest amount.