A negative externality or spillover cost occurs when:
A. firms fail to achieve allocative efficiency.
B. firms fail to achieve productive efficiency.
C. the price of the good exceeds the marginal cost of producing it.
D. the total cost of producing a good exceeds the costs borne by the producer.
Answer: D
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The table below shows a competitive firm's short-run production function. Labor is the firm's only variable input, and market price for the firm's product is $2 per unit.
If the wage rate is $200, how many units of labor will the firm employ?
A. 3 B. 4 C. 5 D. 6 E. 0, the firm shuts down
Exhibit 2-4 Production possibilities curve data A B C D E Capital goods 0 10 20 30 40 Consumer goods200 180 140 80 0 In Exhibit 2-4, if the economy chooses production possibility D rather than production possibility B, it can expect
A. less growth in the future because it will use up its consumer goods. B. more growth in the future because of the accumulation of capital. C. the same amount of growth in the future but with a lower standard of living. D. the same amount of growth in the future but with a higher standard of living.
Domestic price supports on, say, sugar:
A. generate trade barriers to reduce imports of foreign sugar. B. increase world sugar prices. C. keep the domestic price of sugar artificially low. D. increase the earnings of foreign sugar producers.
All of the following questions or statements regarding tariffs are positive except
A) Economic models can be used to estimate the dollar amounts gained by the winners from the imposition of a tariff. B) Economic analysis can decide whether a tariff proposal should be enacted. C) Economic analysis can show the size of the loss of economic efficiency from the imposition of a tariff. D) Economic models can be used to estimate the dollar amounts lost by the losers from the imposition of a tariff.