An economist estimates that the maintenance of a public recreation center costs $80,000 a year and that the recreation center generates $65,000 a year in revenue from usage fees. From society's point of view, the maintenance of this recreation center is
A. potentially efficient because the value of the gains exceed the value of the losses.
B. inefficient, because everyone in the community pays taxes to support it, but only those who pay fees to use the recreation center benefit.
C. potentially efficient because no one would be made worse off as a result of maintaining the recreation center.
D. efficient because the revenues generated by the recreation center benefit the entire public.
Answer: B
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Saving differs from savings in that
A) saving is a flow while savings is a stock. B) saving is both a flow and a stock while savings is a stock. C) saving is a stock while savings is a flow. D) saving is a stock while savings is both a flow and a stock.
Refer to Figure 6.1. Assume that L1 represents the budget line before a price change. Which change in budget lines represents compensation?
A. L1 to L2
B. L2 to L3
C. L3 to L2
D. L1 to L3
The us government can set interest rates by controlling the money supply
Answer the following statement(s) true (T) or false (F)
The Coase theorem states that if private parties can negotiate the purchase and sale of the right to perform activities that cause externalities, then they:
A. will never arrive at efficient solutions to the problems caused by externalities. B. will never perform activities that generate negative externalities. C. will always perform activities that generate positive externalities. D. can always arrive at efficient solutions to the problems caused by externalities.