Refer to Figure 2-13. Which two arrows in the diagram depict the following transaction: Carter earns a $400 commission for selling men's designer shoes at Brooks Brothers
A) K and G B) K and M C) J and G D) J and M
D
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Why can't all goods be inferior?
What will be an ideal response?
Trade restrictions imposed in the name of national security have been recommended by protectionists in order to:
a. develop strong defense-related industries. b. avoid dependence on foreign suppliers during wartime. c. reduce the necessity of stockpiling strategic supplies. d. all of these.
Why would it be a mistake to treat opportunity costs and explicit monetary costs as identical?
a. Because sometimes the market does not function well. b. Because opportunity costs are different for different goods. c. Because there are trade-offs involved in any decision. d. Because of existence of efficient markets.
Medical research that results in a cure for a serious disease produces positive externalities. What is the impact of this positive externality on economic efficiency?
A) At equilibrium, less than the economically efficient quantity of medical research is produced. B) At equilibrium, more than the economically efficient quantity of medical research is produced. C) A deadweight loss occurs because at equilibrium the marginal social cost of medical research is greater than the marginal social benefit. D) A deadweight loss occurs because at equilibrium the marginal social cost equals the marginal social benefit.