A side effect of an action that affects the well-being of third parties is
A. a marginal cost.
B. a marginal private benefit.
C. an externality.
D. a and b
E. all of the above
Answer: C
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A public good is ________ and ________
A) rival; excludable B) nonrival; excludable C) rival; nonexcludable D) nonrival; nonexcludable
The difference between the costs (or benefits) created by both technological and pecuniary externalities is that in both cases costs are imposed on _____, but for _____ they are external to the market while _____ are allocated within the market
a. parties to the transaction; technological externalities; pecuniary externalities b. parties to the transaction; pecuniary externalities; technological externalities c. third parties; technological externalities; pecuniary externalities d. third parties; pecuniary externalities; technological externalities
When a monopolist increases the quantity that it sells, all else equal, total revenue increases, which is called the output effect
a. True b. False Indicate whether the statement is true or false
In a competitive industry the market-determined price is $12. A firm is currently producing 50 units of output; average total cost is $10, marginal cost is $15, and average variable cost is $7. In order to maximize profit, the firm should:
A. produce more because the firm is earning a profit of $100. B. produce more because the next unit of output increases profit by $2. C. keep output the same because the firm is earning a profit of $100. D. produce less because the last unit of output decreased profit by $3.