If there are no externalities, producing where price is greater than marginal cost is inefficient because for every unit produced, consumers derive benefits that are less than the cost of the resources needed to produce it.
Answer the following statement true (T) or false (F)
False
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When a U.S. firm sells a good abroad for, say, 100 euros (assume $1.5=1euro), U.S. net exports increase by $150. These $150 in exports can be accounted for as $150 increase in capital outflow because ________
A) private consumption in the foreign country increases by $150 B) if the U.S. firm uses the 100 euros to buy a share of stock in a foreign firm, the firm is supplying U.S. capital to that foreign firm C) if the U.S. firm uses the proceeds to buy a U.S. bond, capital investment in the foreign country has increased D) all of the above E) none of the above
Distinguish between investment goods and consumption goods. If you buy a car, is it investment or consumption? What if IBM buys a car? Are inventories a consumption or investment good?
What will be an ideal response?
An import quota is:
A. a tax on the good or services that are imported. B. a limit on the amount of a particular good that can be exported. C. a limit on the amount of a particular good that can be imported. D. None of these is true.
For an economy to be in equilibrium at full employment is, according to Keynes,
a. the natural result of the economy process b. always the result of government intervention c. strictly a matter of historical accident d. a matter of convincing investors to match the level of saving in the economy e. an unattainable goal