A couple refuses to mow their lawn. Their neighbors take them to court, arguing using the logic of economic theory that
a. property rights are poorly defined because externalities exist
b. they are free riders and entitled to the value of the externalities
c. although there are no third parties because property rights are clear, the market still generates market failure
d. although property rights are clear, there are still externalities that should be considered
e. market failure can be avoided if the couple sells their property to any of the neighbors
D
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A deadweight loss
A) is possible only if the good is underproduced but is not possible if the good is overproduced. B) subtracts only from producer surplus. C) is a loss to consumers and a gain to producers. D) is a loss inflicted on the entire society.
One of the results of the knowledge economy
A) is that content matters. B) is that the information content of a good can be distinguished from the physical product. C) is that the information content of a good cannot be distinguished from the physical product. D) is that the physical features of the product has become more important.
Instead of throwing away a worn-out pair of jeans, a cowboy trades them in for $12 . The jeans are resold for $45 to someone who likes to project a rugged image. These transactions are Pareto improvements
a. True b. False
Refer to the graph shown. In 1975 U.S. President Gerald Ford instituted a large tax cut. At the same time, the Fed expanded the money supply. The effect of these policies on the AD curve is best shown as a movement from:
A. A to D. B. A to B. C. B to A. D. D to A.