Use the following diagram in which S is the market supply curve and S1 is a supply curve comprising all costs of production, including external costs, to answer the question below.
Assume that the number of people affected by these external costs is large. Without government interference, this market will reach a(n)
A. optimal allocation of society's resources.
B. overallocation of resources to this product.
C. higher price than is consistent with an optimal allocation of resources.
D. underallocation of resources to this product.
Answer: B
You might also like to view...
As was demonstrated in 2007, firms in the shadow banking system
A) were very vulnerable to bank runs. B) were protected from financial ruin by federal deposit insurance. C) were more insulated from the financial crisis than were commercial banks. D) were well insulated from bank runs.
Which of the following would be part of the Thai demand for U.S. dollars?
a. A Thai street seller trying to sell a shirt to an American tourist b. A Thai bank selling dollars it possesses in exchange for euros c. An American exchanging dollars for Thai bahts that she will spend on her next vacation to Bangkok d. A Thai export company selling its products in the American markets e. A Thai importer who wants to buy a Caterpillar tractor
Explain why there is nothing predetermined about the relationship between time and progress in technology that would make Moore's Law into an actual law
What will be an ideal response?
Economists believe that most people's actions are rational and purposeful, not random and chaotic
a. True b. False Indicate whether the statement is true or false