What is an externality?
What will be an ideal response?
An externality is a benefit or cost that affects someone who is not directly involved in the production or consumption of a good or service.
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If demand for a product is perfectly inelastic, a change in price will not change total revenue
Indicate whether the statement is true or false
Increasing U.S. trade deficits result in: a. federal budget surpluses
b. increased U.S. savings. c. reduced purchases of U.S. government bonds by people in other countries. d. accumulation of dollars overseas. e. increased U.S. investment abroad.
Which of the following characteristics of the monopolistically competitive and the perfectly competitive market will cause the firm to earn zero profits in the long run?
A. no barriers to entry B. many buyers C. price taker D. homogeneous product
The argument that money should be given instead of in-kind help to welfare recipients is based on the idea that
A. welfare recipients cannot be trusted to use the in-kind help properly. B. in-kind help is not wanted. C. money allows more options and maximizes individual freedom. D. in-kind assistance does not go through the market system.