A negative externality causes a private market to produce which of the following quantities?
a) less than market equilibrium
b) more than market equilibrium
c) more than is socially desirable
d) less than is socially desirable
Ans: c) more than is socially desirable
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
How does a dominant strategy equilibrium occur in a simultaneous move game?
What will be an ideal response?
Which of the following statements is TRUE about contestable markets?
A) There are significant barriers to entry. B) Firms earn large economic profits. C) Each firm faces a perfectly elastic demand. D) There are few firms in the industry.
Which statement best defines the classical perspective?
a. Aggregate supply determines aggregate demand. b. Aggregate demand does not matter for anything. c. Aggregate supply determines real variables such as output. d. Aggregate demand determines all endogenous variables.