In a situation where an externality occurs, the "third party" refers to those who
A. are not directly involved in the transaction or activity.
B. buy the product from others.
C. produce the product for others.
D. trade the product with others outside the nation or community.
Answer: A
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In which of the following market structures does a seller have NO market power?
A) Monopoly B) Oligopoly C) Perfect competition D) Monopolistic competition
Hold-up can only occur if
a. Costs are fixed b. Costs are sunk c. Costs are avoidable d. Costs are incurred
If an increase in the price of a product from $100 to $200 per unit leads to a decrease in the quantity demanded from 10 to 8 units, then demand is
a. elastic b. inelastic c. unit elastic d. 0 e. inferior
Which of the following would best explain why regulatory capture is a problem?
A. The regulations implemented tend to reduce the profitability of the regulated industry and reduce global competitiveness. B. Regulatory capture unduly increases the size and power of government, increasing costs for taxpayers. C. Individuals implementing the regulations lack expertise about the industry and therefore make poor regulatory choices. D. The regulations implemented serve the private interests of the regulated industry, rather than addressing social interests such as consumer safety and environmental protection.