When a free-rider problem exists,
a. the market will devote too few resources to the production of the good.
b. the cost of the good will always be more than the benefit of the good.
c. the good will not be produced.
d. entrepreneurs will eventually find a way to make free-riders pay their share.
a
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If the natural monopoly shown in the figure above is unregulated, it will make an economic profit of
A) $2 million. B) $4 million. C) $9 million. D) $0, that is, it earns a normal profit.
What problems does a command economy face when it tries to determine what to produce for the economy?
What will be an ideal response?
"The countries which have implemented policies that emphasize exporting have been more successful than the countries using import-substituting industrialization (ISI)." Does theory suggest that this must be the case? That is, theoretically, is there no support for ISI, or are the necessary conditions for successful ISI not being met?
What will be an ideal response?
Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher