In a market with positive externalities, the market equilibrium price will be greater than the efficient equilibrium price
Indicate whether the statement is true or false
FALSE
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Refer to Figure 14-1. Should Lexus lower its price in order to deter BMW's entry into the luxury hybrid automobile market?
A) Yes, it will drive BMW out of the market. B) No, it should keep the same price and work to capitalize on its brand loyalty. C) In terms of profit earned, it makes no difference whether Lexus lowers its price or not; in either case it will make $280 million profit if BMW enters. D) No, because BMW will enter the market regardless of Lexus' decision about its price.
Which of the following would be most likely to increase consumption spending?
a. A higher interest rate b. A drop in stock prices c. A reduction in consumer credit card debt d. The expectation of lower future prices e. An increase in the income tax rate
If the exchange rate between the Canadian dollar and the American dollar was fixed at 1.30 Canadian dollars per U.S. dollar and investors perceived Canadian bonds to be equal in value and risk to U.S. bonds, if the U.S. bonds are selling for $1,000 and have a 5 percent interest rate, assuming capital flows freely between the two countries what will be the price and the interest rate of the Canadian bonds?
What will be an ideal response?
Which of the following is an important ingredient of efficient economic organization
What will be an ideal response?