When there is an external benefit, the unregulated market
A) overproduces the good or service.
B) underproduces the good or service.
C) reaches the most efficient solution.
D) maximizes public welfare.
Answer: B
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People are most likely to make their opinions on a potential piece of legislation known to their representatives when
A) the legislation matters greatly to them, whether or not it affects their private interests. B) the legislation will affect their private interests substantially. C) they believe their actions will make enough difference to justify the effort. D) they can do so at low cost to themselves.
If in the market for bananas the supply curve has shifted to the right, then
A) the supply of bananas has decreases. B) the quantity of bananas supplied has decreased. C) the quantity of bananas supplied has increased. D) the supply of bananas increased.
A trade-off between aggregate output and inflation
A) is theoretically possible, but has never been observed in practice. B) may exist in the short run, but not in the long run. C) may exist in the long run, but not in the short run. D) exists in both the short run and the long run.
Optimal decisions are made on the basis of
A. rate of growth in total profit. B. average cost and average revenue figures. C. impact on market share. D. marginal cost and marginal revenue figures.