In graphical form, the presence of an external benefit that is ignored by consumers can be shown as
A. a market demand curve to the left of the market demand curve for which the consumers take the external benefit into account.
B. a market demand curve the same as the market demand curve for which the consumers take the external benefit into account.
C. a market demand curve to the right of the market demand curve for which the consumers take the external benefit into account.
D. the absence of a market demand curve.
Answer: A
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Indicate whether the statement is true or false
A distinguishing characteristic of a natural monopoly is that
a. the government restricts the number of firms to one for the industry b. the ATC curve is downward sloping over the entire production range c. the TC curve is downward sloping over the entire production range d. its demand curve is horizontal e. the industry's demand curve is also the firm's demand curve
According to the model of the macro economy in Figure 18.3, a shift from LRAS1 to LRAS2 will cause, ceteris paribus,
A. A decrease in the level of output. B. An increase in the unemployment level. C. An increase in government spending. D. A decrease in the price level.
If a “liberal” wanted to decrease aggregate demand, which of the following would he or she tend to favor?
A. An increase in government spending, because it will increase the size of the public sector. B. A decrease in government spending, because it keeps the public sector small. C. An increase in transfer payments, because it has a larger multiplier than tax changes. D. An increase in taxes, because it makes the public sector larger.