When positive externalities are present, it means that:
A. individuals don't take into account all the benefits associated with their market choice.
B. society bears part of the cost borne of private transactions.
C. individuals consume more than the social optimum.
D. All of these statements are true.
A. individuals don't take into account all the benefits associated with their market choice.
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When technology advances, supply
A) increases, which is represented by a leftward shift in the supply curve. B) increases, which is represented by a rightward shift in the supply curve. C) decreases, which is represented by a rightward shift in the supply curve. D) decreases, which is represented by a leftward shift in the supply curve. E) remains the same; only quantity supplied changes.
If service stations raise the price of gasoline and experience a decrease in demand for automobile tires, then gasoline and tires are:
a. Substitute goods b. Inferior goods c. Complementary goods d. Economic goods
A bond is selling for $1000 and it pays $150 in interest a year. If the interest rate changes to 20 percent, then
A. the price of the bond rises to $1250. B. the interest payment rises to $175. C. the interest payment falls to $75. D. the price of the bond falls to $750.
For most commonly used social welfare functions, an efficient allocation is
A) always preferred over any inefficient allocation. B) not possible. C) usually preferred. D) never preferred.