A student wrote: "A subsidy raises marginal social benefit above marginal social cost and eliminates the deadweight loss from underproduction." If you were the instructor, how would you correct this statement?
What will be an ideal response?
The student errs in several important respects. Here is a corrected statement: "A subsidy raises marginal social benefit cost above marginal social cost benefit and eliminates the creates a deadweight loss from underproduction overproduction."
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A stockholder ________ an owner of the firm, and a bondholder ________ an owner of the firm
A) might be; is not B) is; is not C) is not; is D) is not; is not E) is; is
Which of the following statements is correct?
a. Because we have more food per capita, global food prices have decreased since 1875. b. Because we have less food per capita, global food prices have increased since 1875. c. Because we have less food per capita, global food prices have decreased since 1875. d. Because we have more food per capita, global food prices have increased since 1875.
A government with a national debt that is large and growing relative to the size of the economy will
a. eventually find it difficult to borrow in global credit markets. b. be able to borrow at lower interest rates than countries with less outstanding debt. c. have to allocate a large and growing amount of tax revenue to the payment of interest on the outstanding debt. d. do both a and c.
Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and monetary base in the context of the Three-Sector-Model? a. The GDP Price Index rises and monetary base rises
b. The GDP Price Index rises and monetary base falls. c. The GDP Price Index and monetary base fall. d. The GDP Price Index and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.