When a price fails to reflect all the benefits of a product, too much of it is produced and/or consumed
a. True
b. False
Indicate whether the statement is true or false
False
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The above figure shows a firm in monopolistic competition. At the profit maximizing level of output, excess capacity for the firm is equal to
A) 0 units per day. B) 4 units per day. C) 8 units per day. D) 16 units per day.
Entry into a perfectly competitive industry to occurs whenever:
A. accounting profit is equal to zero. B. economic profit is equal to zero. C. accounting profit is greater than zero. D. economic profit is greater than zero.
Which of the following causes an increase in demand for a normal good?
A. decrease in income B. decrease in price C. increase in the price of a substitute D. increase in the price of a complement
Which of the following might be a method that the government could use to correct a negative externality?
A) an effluent fee on waste from the production of goods that create negative externalities B) government subsidies to producers of goods that create negative externalities C) financing additional production of goods that create negative externalities D) encouraging overallocation of resources of production of goods that create negative externalities