Refer to Figure 13-5. The candy store represented in the diagram is currently selling Qa units of candy at a price of Pa. Is this candy store maximizing its profit and if it is not, what would you recommend to the firm?
A) Yes, it is maximizing its profit by charging the highest price possible.
B) No, it is not; it should lower its price to Pc and sell Qc units.
C) No, it is not; it should lower its price to Pb and sell Qb units.
D) No, it is not; since its marginal cost is constant, it should produce and sell as much candy as it can. It should sell Qd units at a price of Pd.
C
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What is an externality?
What will be an ideal response?
Which of the following is NOT included in the measure of M1?
A) NOW accounts B) demand deposits C) currency D) savings deposits
The Beveridge curve shifted outward during what period?
A) during the Great Depression. B) during the Great Moderation. C) after January 2008. D) between January 2000 and December 2007.
One difficulty in using voluntary transactions to internalize externalities is that
A. people are motivated by self-interest and are often unwilling to engage in a transaction that might make another person better off. B. people usually don't understand what the real opportunity costs are that they face. C. transaction costs of coming to an agreement can be very large when numerous people are involved. D. the government usually will not enforce contracts of this type.