Which of the following statements is TRUE about the relationship among external, internal and social costs?
A) Social costs will always be higher than external costs.
B) Social costs will always be higher than internal costs.
C) Internal costs will always be higher than external costs.
D) Internal costs will never equal external costs.
A
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Critics of flexible exchange rates argue that flexible rates: a. reduce uncertainty in international trade
b. automatically create an equilibrium price for each currency in the foreign exchange market. c. make nations more constrained in carrying out internal macroeconomic policies. d. increase uncertainty in international trade.
People buy insurance:
a. to defer consumption. b. to insure against poor health. c. because they are risk averse. d. to maximize their welfare. e. because of externalities.
If the government saved during an economic boom by increasing taxes or decreasing spending, this would be:
A. contractionary fiscal policy. B. expansionary monetary policy. C. expansionary fiscal policy. D. contractionary monetary policy.
Refer to Figure 3.1, which shows Molly's and Ryan's individual demand curves for compact discs per month. Assuming Molly and Ryan are the only consumers in the market, if the market quantity demanded is 15, the price must be:
A. $0. B. $6. C. $9. D. $15.