A ________ externality occurs when a market transaction affects others through market prices
A) positive
B) negative production
C) negative consumption
D) pecuniary
D
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Which of the following is NOT a commitment device?
A. A manufacturer's 2-year agreement to fix, at no cost to you, anything that breaks on your computer. B. A non-refundable advance payment to reserve a room at a resort. C. A pre-nuptial agreement that provides for a large penalty in the event a spouse has an affair. D. High fines for illegal parking on campus.
Markets do not always allocate resources efficiently, however, government always does
a. True b. False
If Adam's Rib Joint took in $35,000 in revenue last week and had out-of-pocket expenses of $31,500:
a. it is clear that Adam made an economic profit of $3,500 b. Adam really didn't make any economic profit since he needs to put the difference between revenue and out-of-pocket expenses back into the firm. c. Adam clearly did not earn an economic profit. d. it is not clear whether Adam earned any economic profit last week because it depends on the magnitude of the implicit costs.
A consequence of an inflationary gap is ____ as output begins to decrease and prices continue to increase.
A. stagflation B. reflation C. disinflation D. perflation