If we know that the supply curve for good x fails to reflect the total cost to society of producing that good, then we know that
a. the market for good x is characterized by an externality, but we cannot determine whether the externality is positive or negative from this fact alone.
b. the market for good x is characterized by a positive externality.
c. the market for good x is characterized by a negative externality.
d. the demand curve for good x fails to reflect the value to society of that good.
c
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Which of the following statements correctly differentiates between consumer surplus and net benefits?
A) Consumer surplus at different levels of consumption can be calculated arithmetically, whereas net benefits at different levels of consumption cannot be estimated. B) Consumer surplus at different levels of consumption cannot be estimated, whereas net benefits at different levels of consumption can be calculated arithmetically. C) Consumer surplus measures difference between willingness to pay for a good and its price, whereas net benefits measure the overall satisfaction gained from consumption of a good. D) Consumer surplus equals the overall satisfaction gained from consumption of a good, whereas net benefits measure the difference between willingness to pay for a good and its price.
Consider three different closed economies with the following national income statistics. Country A has taxes of $40 billion, transfers of $20 billion, and government expenditures on goods and services of $30 billion. County B has private savings of $60 billion, and investment expenditures of $40 billion. Country C has GDP of $300 billion, investment of $90, consumption of $180 billion, taxes of
$60 billion and transfers of $20 billion. From this information, we know that a. country A has the largest government budget deficit. b. country B has the largest government budget deficit. c. country C has the largest government budget deficit. d. The government budget deficit is equal in all three countries.
If price rises, what happens to supply of a product?
a. It increases. b. It decreases. c. It does not change. d. Uncertain--economic theory has no answer to this question.
According to Keynesian theory, a decrease in government expenditures would be a proper fiscal policy during
A. an inflationary gap. B. a recessionary gap. C. a natural disaster. D. none of these.