Which of the following is the best example of a supply-side market failure?
A) No one provides street lights in a town because, once the lights are in operation, people don't have to pay to use them.
B) Street performers don't get full payment for the value of their output because people watch and enjoy the shows without paying the artist.
C) Government imposes taxes on the production of a socially desirable good.
D) A firm keeps its production costs down by dumping its waste in the nearby river, adversely affecting water quality for residents in the area.
Ans: D) A firm keeps its production costs down by dumping its waste in the nearby river, adversely affecting water quality for residents in the area.
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Cost minimization is the process of making optimal use of all of the inputs whose quantities are
A. set in the short run. B. set in the intermediate run. C. set in the long run. D. variable in the short and long run.
A pollution tax penalizes inefficient firms
a. True b. False Indicate whether the statement is true or false
A fall in the price of a competing product will produce an outward shift in the demand curve for most products
a. True b. False Indicate whether the statement is true or false
What does the structural stagnation hypothesis say about how soon the economy will return to its trend growth?
A. The economy has already returned to its previous trend growth rate. B. It will be a long time before the economy returns to its previous trend growth rate. C. The economy will never return to its previous trend growth rate. D. The economy will return to its previous trend growth rate soon.