The market tends to overproduce goods that have external costs because
A. Producers experience higher costs than society.
B. Producers do not take into account those external costs that they don't have to pay.
C. The government is not able to produce these goods.
D. Producers cannot keep the goods from consumers who don't pay, so they produce a greater amount.
Answer: B
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a. Diagrams hide reality, and theory is an attempt to avoid reality. b. It is easier than building models out of physical objects. c. Economic reality cannot possibly be represented except in diagrams. d. Most economists are frustrated artists, and like to draw when possible. e. All of the above are correct.
Who among the following is most likely to favor an appreciation of the U.S. dollar?
a. a German professor visiting Chicago b. an American farmer who depends on exports c. an American professor on a tour of Austrian universities d. Disney World in Orlando, Florida, a popular destination for foreign tourists
Which is not true of the Fed?
A. US central bank B. twin mandates of max employment and price stability C. OMO is its central tool D. totally centralized in DC E. responsible for monetary policy, bank regulation, and financial system stability
The imposition of a tax on a product
A. shifts the demand curve to the right. B. shifts both the supply and the demand curve to the right. C. shifts the supply curve to the left. D. shifts the supply curve to the right.