When the marginal social cost of the production of Good A is greater than the marginal private cost of the production of Good A, then
A) a competitive, unregulated market produces less than the efficient quantity of Good A.
B) a competitive, unregulated market produces the efficient quantity of Good A.
C) a competitive, unregulated market produces more than the efficient quantity of Good A.
D) the government should levy a tax on the production of Good A that is equal to the horizontal distance between the two marginal cost curves.
C
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A central bank can control the real interest rate precisely, so long as ________ remains constant
A) the nominal interest rate B) monetary policy C) expected inflation D) all of the above E) none of the above
If a union negotiates a wage above the market equilibrium, each firm hiring union members faces
a. a perfectly inelastic supply curve for labor b. a perfectly elastic supply curve for labor c. a perfectly inelastic demand curve for labor d. a perfectly elastic demand curve for labor e. perfectly inelastic supply and demand curves for labor
Open market operation
What will be an ideal response?
Answer the following statement(s) true (T) or false (F)
1. In a perfectly competitive market, there are few buyers and sellers. 2. In a perfectly competitive market, consumers believe all firms sell homogeneous products. 3. There are often large barriers to the entry, but not the exit, of firms in a perfectly competitive market. 4. In a perfectly competitive market, consumers, for the most part, are price takers. 5. A firm’s demand curve slants upward because market demand increases when the supplier lowers her prices in a perfectly competitive market.