Refer to the supply and demand graph below for a public good. If Q1 units of the public good are produced, then:
A. Users are willing to pay more for the public good than it costs to produce it
B. Users are willing to pay less for the public good than it costs to produce it
C. There is an over-allocation of resources towards producing this public good
D. Allocative efficiency is achieved in the market
A. Users are willing to pay more for the public good than it costs to produce it
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On the graph above, a movement from point ________ to point ________ might represent a negative supply shock
A) H; G B) H; F C) F; I D) F; G E) none of the above
Most economists reject the theory of rational expectations because
a. expectations adjust very quickly. b. workers receive wage increases in advance of inflation. c. the short-run aggregate supply curve is vertical. d. labor contracts tend to embody past inflation rates.
The formula for required reserves is:
A. rD. B. D/rD. C. 1/rD. D. (1/rD ) D.
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2. B. P3 and Y1. C. P2 and Y2. D. P2 and Y3.