In a market where a positive externality is present, the effect of a government subsidy would be to ensure:
A. a more fair distribution of surplus.
B. an efficient outcome.
C. that those who enjoy the benefit receive the surplus.
D. All of these statements are true.
B. an efficient outcome.
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Place point Z on the graph to indicate where the United States economy will most likely operate five years from now if we enjoyed an economic growth rate of 5 percent a year.
For an economy starting at potential output, a decrease in one or more of the components of aggregate expenditure in the short run results in a(n):
A. recessionary output gap. B. decrease in potential output. C. expansionary output gap. D. increase in potential output.
If you invest in a foreign company by buying 8 percent of its shares of stock, you have engaged in
A) moral hazard. B) foreign direct investment. C) portfolio investment. D) adverse selection.
In the short run, a profit-maximizing firm will shut down if its total revenue is greater than its variable costs
Indicate whether the statement is true or false