Which of the following would result in a positive externality?
A) A local government establishes a price ceiling on rental apartments.
B) An electric utility burns coal that causes acid rain.
C) Medical research results in a cure for malaria.
D) McDonald's eliminates all salads from its menu.
Answer: C
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Economics only applies to
A. decision making by households. B. decision making by governments. C. decision making by business firms. D. all of these kinds of decisions.
The slope of a demand curve is not used to measure the price elasticity of demand because
A) the slope of a linear demand curve is not constant. B) the measurement of slope is sensitive to the units chosen for price and quantity. C) the slope of a line cannot have a negative value. D) the slope of the demand curve does not tell us how much quantity changes as price changes.
Which of the following is true about a liquidity trap situation:
a. Quantitative easing might be a more effective strategy to stimulate the economy than buying short term government securities.
b. Quantitative easing may be able to affect long term interest rates even when the Fed is unable to appreciably lower short term interest rates.
c. The Fed cannot easily reduce the fed funds interest rate.
d. All of the above are true.
Refer to the above graph. The long-run aggregate supply curve would be represented by which line?
A. 1 B. 2 C. 3 D. 4