What is marginal external cost of production?
What will be an ideal response?
Marginal external cost of production is the cost of producing an additional unit of a good or service that falls on people other than the producer.
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The use of discretionary fiscal policy is hampered by
i. difficulty of estimating the level of potential GDP. ii. lack of accuracy of economic forecasts. iii. the small impact tax cuts and increases in government expenditure have on aggregate demand. A) i only B) ii only C) iii only D) i and ii E) i, ii, and iii
The recessions associated with the business cycle come at irregular intervals.
a. true b. false
If a borrower and lender agree to an interest rate on a loan when inflation is expected to be 7 percent and inflation turns out to be 10 percent over the life of the loan, then the borrower ________ and the lender ________.
A. gains; loses B. loses; gains C. is not affected; gains D. gains; gains
P-TV and QRS-TV are trying to decide whether to air a sitcom or a reality show in a given time slot. Viewers like both sitcoms and reality shows, but sitcoms are more expensive to produce than reality shows since real actors need to be hired. QRS-TV makes its decision first, and then P-TV observes that choice before making its decision. Both stations know all of the information in the decision tree below.
Given the information in this decision tree, if QRS-TV announces that it will air a sitcom, it can expect to:
A. earn $20 million. B. earn $5 million. C. lose $5 million. D. earn $10 million.