Nancy loves to landscape her yard, but her neighbor Tom places a low value on his landscaping. When Tom's grass is neglected and gets long, Nancy will mow for Tom. This is an example of:
a. the fallacy of composition
b. a pollution tax.
c. a private solution to a negative externality problem.
d. how lazy Tom is.
c
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Analyze the short-run and long-run effects of an unanticipated decrease in the money supply in the misperceptions model. Tell what happens to output, the price level, and the expected price level in both the short run and long run
What will be an ideal response?
Building infrastructure is left to the government since ________
A) the cost of such projects would not be economical for any individual firm B) borrowing costs make such projects prohibitively expensive C) inflation tends to erode the real value of debt D) a natural monopoly would result if this activity were undertaken by an individual private firm
Consider the two graphs above. Suppose producers forecast a decrease in sales. This would ________ the desired level of inventories, as depicted in graph ________
A) increase; B B) increase; A C) decrease; B D) decrease; A