Which of the following is FALSE?
A) Social costs do not include private costs.
B) Private costs do not include external costs.
C) If social costs are greater than private costs, "too much" of a good is being produced.
D) Pollution is a social cost.
Answer: A
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Refer to Common Property II. Suppose the common property becomes privately owned. If the owner charges a competitive entrance fee for the right to use the property, social gain will equal
The following questions refer to the accompanying diagram, which shows the benefits and costs associated with the use of a common property.
a. area C + D + F + G + I.
b. area F + G + H + I.
c. area A + B + C + D + F + G + I.
d. area A + B + C + D + E + F + G + H + I.
Firms price discriminate
A) to take advantage of customers. B) to reduce the quantity sold so as to reduce production costs. C) to increase profits. D) to increase total economic surplus.
Suppose the marginal propensity to consume is 0.75. A $150 billion increase in government spending shifts the IS curve
A) to the right by $50 billion. B) to the left by $50 billion. C) to the left by $600 billion. D) to the right by $600 billion.
A perfectly competitive market usually achieves economic efficiency because
a. there are no barriers to entry b. there are no barriers to entry and all of the goods are perfect substitutes c. each of the firms in the industry are profit maximizers d. it is the most fair e. most buyers in the market have the same level of income