Which of the following is an example of a negative externality?
A. Bad weather reduces the size of the wheat crop.
B. A reduction in the size of the wheat crop causes the income of wheat farmers to fall.
C. Smoking harms the health of nonsmokers who are nearby.
D. Smoking harms the health of the smoker.
E. all of the above
Answer: C
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A firm will shut down temporarily when the price is so low that total revenue is insufficient to cover the
A) total cost of production. B) total variable cost of production. C) total fixed cost of production. D) marginal cost of production. E) none of the above.
Indexing Social Security payments:
A. still requires a concerted effort on the part of Congress to convert them to their nominal amounts. B. still requires a concerted effort on the part of Congress to vote the amount of increase. C. no longer requires a concerted effort on the part of Congress to maintain their real value. D. no longer requires a concerted effort on the part of Congress to maintain their nominal value.
The burden of taxation in the United States
A. from federal government taxes is smaller than the burden from state and local government taxes. B. has increased since 1929. C. has decreased since 1929. D. from state and local government taxes has increased, while the burden from federal taxes has decreased.
Using real GDP on the horizontal axis instead of real disposable income implies that a marginal propensity to consume 0.6 generates for every additional $100 of real GDP, there is
A. $40 of additional saving and taxes. B. $40 of additional consumption spending. C. $4 of additional saving. D. $60 of additional real disposable income.