When there are positive externalities associated with the consumption of a good, we can expect the market:
a. demand curve to lie above the social demand curve.
b. demand curve to lie below the social demand curve.
c. supply curve to lie above the social supply curve.
d. supply curve to lie below the social supply curve.
e. demand curve to lie below the social supply curve.
b
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Which of the following statements is true of a frictionless labor market?
A) The quantity of labor demanded always exceeds the quantity of labor supplied. B) Firms can instantly hire and fire workers. C) The quantity of labor supplied always exceeds the quantity of labor demanded. D) All firms pay below the equilibrium wage rate.
Which of the following statements correctly describes a competitive market?
A) Buyers and sellers negotiate prices before making exchanges. B) The market price for the same good varies from seller to seller. C) Sometimes, a single seller has the ability to dictate the market price. D) The market price is determined by the interaction of demand and supply.
If government regulation sets the maximum price for a natural monopoly equal to its marginal cost, then the natural monopolist will
a. earn economic losses. b. earn economic profits. c. earn zero economic profits. d. produce a lower quantity of output than is socially optimal.
The invisible hand principle indicates that competitive markets can help promote the efficient use of resources
A) if, and only if, businesses recognize their social obligation to keep costs low and use resources wisely. B) even when market participants care only about their own self interests rather than about the overall efficiency of resource use. C) only if buyers and sellers really care, personally, about economic efficiency. D) even if business firms fail to produce goods efficiently.