The existence of economic losses induces firms to:
A. enter an industry, which shifts the market supply curve to the left and decreases market price.
B. enter an industry, which shifts the market supply curve to the right and decreases market price.
C. exit an industry, which shifts the market supply curve to the right and decreases market price.
D. exit an industry, which shifts the market supply curve to the left and increases market price.
Answer: D
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A major computer software company maintains a technical support center in a rural area and is the only employer in this region
Suppose the firm develops a new software system for managing technical support calls, and the marginal product of labor increases. What happens to the equilibrium outcome in this labor market? A) Labor demand shifts rightward, equilibrium wage and employment levels decline B) Labor demand shifts rightward, equilibrium wage and employment levels increase C) Labor demand curve remains the same, equilibrium wage and employment levels increase D) Labor demand curve remains the same, equilibrium wage and employment do not change E) none of the above
Cost-benefit analysis is important to determine the role of government in our economy because
a. the government should provide all goods for which the benefits exceed the costs. b. cost-benefit analysis identifies the possible gains to society from government provision of a particular good. c. markets for private goods cannot effectively assign costs and benefits. d. cost-benefit analysis is the best tool to identify market failures.
When a market experiences a positive externality,
a. the demand curve does not reflect the value to society of the good. b. too much of the good is being produced. c. the government can internalize the externality by imposing a tax on the product. d. the private value is greater than the social value.
Which of the following is an example of an external cost?
A. Automobile exhaust fumes. B. Eating a sandwich at a local deli C. Unfair pricing behavior by a monopoly. D. Unemployment.