The free-rider problem is the reason way private markets are unlikely to achieve the efficient level of production of
A) normal goods.
B) excludable goods.
C) public goods.
D) private goods.
C
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
One way for the government to eliminate a negative externality is to
A) charge an emissions fee. B) set an emissions standard. C) levy an effluent charge. D) All of the above.
A monopolistic competitor is in long-run equilibrium when
A) it is making zero profits and price equals marginal cost. B) its average total cost curve is tangent to the demand curve at the profit-maximizing rate of output. C) price is greater than marginal cost. D) it is making positive profits or zero profits and price is greater than marginal cost.
When Johanna cut prices in her jewelry store by 20 percent, the dollar value of her sales fell by 20 percent. This indicates that
a. demand was elastic. b. demand was inelastic. c. demand was unit elastic. d. the demand curve was vertical.