Left to their own, private markets tend to
a. under-allocate resources to public goods
b. allocate the economically efficient amount of resources to public goods.
c. over-allocate resources to public goods.
a
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According to the Taylor rule, if inflation equals 4 percent and there is a recessionary gap equal to 4 percent of potential output, the Fed will set a real interest rate of ________ percent and a nominal interest rate of ________ percent.
A. 1; 4 B. 2; 4 C. 1; 5 D. 4; 4
If price changes by one firm induce rival firms selling close substitutes to alter their prices,
A) firms will be able to raise their prices without fear of losing sales. B) the demand curve will shift in response to a change in price. C) the original firm faces an elastic demand curve. D) the original firm faces an inelastic demand curve. E) there is no competition between the rival firms.
Refer to Figure 13-6. Suppose Dell finds the relationship between the average total cost of producing notebook computers and the quantity of notebook computers produced is as shown by Figure 13-2
Dell will maximize profits if it produces ________ notebook computers per month. A) 100,000 B) 200,000 C) 300,000 D) Not enough information is given to determine the profit-maximizing quantity.
The federal funds rate is determined in a market and targeted by the Fed
a. True b. False