Suppose that people want bike paths through town, but no private individual or business is willing to build it. This is an example of:
A. productive inefficiency.
B. government failure.
C. negative externalities.
D. market failure.
Answer: D
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If a nation's nominal GDP is $40 billion, its money supply is $8 billion, and its price level is 1.25, then the velocity of money is
A) 2.0. B) 0.2. C) 6.25. D) 5.0.
If one dollar exchanges for 100 Japanese yen, then
a. a yen is worth $1 b. $10 will exchange for one yen c. a yen is worth $100 d. the United States gets 100 times the number of goods for its currency than does the yen e. one yen is worth a penny
The towns of Jekyll and Hyde each have a labor force of 2,000 people. In Jekyll, 500 people were unemployed for the entire year, while the rest of the labor force was employed continuously. In Hyde, every member of the labor force was unemployed for three months and was employed for nine months. The average duration of unemployment spells over the year was ________ months in Jekyll and ________ months in Hyde.
A. 3; 9 B. 12; 3 C. 3; 3 D. 12; 9
An oligopolist decides to lower its price to capture a greater market share. This sets off a price war with its rivals, and the price moves from P 1 to P 2 and so forth. What is the ultimate outcome if this price war continues?
a. The final price equals the ATC, and economic profits become zero.
b. The final price reflects the benefits of collusion between the firms.
c. Without collusion the firms are able to charge a higher price than before.
d. The final price exceeds the ATC, and economic profits are earned.