When the production of a good creates an external cost, by setting the tax rate equal to the ________, firms can be made to behave in the same way as they would if they bore the cost of the externality directly
A) marginal external cost
B) marginal social benefit
C) marginal private benefit
D) marginal social cost
A
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The law of diminishing marginal utility gives us a deeper understanding of the downward-sloping demand curve because
A. Consumers are willing to pay a higher price for a greater quantity. B. Consumers do not respond to a change in price. C. Consumer tastes change due to advertising. D. When marginal utility is high, we are willing to pay a higher price.
A lender who wants to avoid the problem of adverse selection could:
A. charge the same average interest rate to all borrowers. B. only lend by issuing credit cards. C. charge a low interest rate and make the applicant prove they warrant the low rate by providing information. D. charge a very high interest rate and assume all loan applicants are high risk.
Fernando allocates his lunch money between pizza and Coke. A slice of pizza costs $1.50 and a can of Coke costs $1. The marginal utility of the last slice of pizza Fernando ate that day was 30 units, and the marginal utility of the last can of Coke was 25 units. If Fernando decides to spend all of his lunch money, then identify the correct statement
a. ?Fernando could have increased his total utility by purchasing more Coke and the same quantity of pizza. b. ?Fernando could have increased his total utility by purchasing more pizza and the same quantity of Coke. c. ?Fernando allocates his money so as to maximize his total utility. d. ?Fernando's total utility would have been greater if he had purchased more pizza and less Coke. e. ?Fernando's total utility would have been greater if he had purchased more Coke and less pizza.
Countries with relatively low inflation rates will have appreciating currencies.
Answer the following statement true (T) or false (F)