The idea that individuals can reach an efficient equilibrium through private trades, even in the presence of an externality, is called:
A. market failure.
B. trade quotas.
C. the invisible hand.
D. the Coase theorem.
Answer: D
You might also like to view...
Refer to Table 8-4. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals
A) $2,200. B) $2,100. C) $1,600. D) $1,400.
From a social viewpoint, when price = marginal cost:
a. the economy as a whole would be better off if more was produced. b. the economy as a whole would be better off if less was produced. c. firms would be better off by producing less. d. the economic efficiency would be attained as a whole. e. the consumers would be better by consuming less.
A hypothetical open economy has a marginal propensity to import (MPI) equal to 0.2 and a marginal propensity to consume equal to 0.7 . Assume that the economy is initially in equilibrium. What is the marginal propensity to save of this economy?
a. 0.2 b. 0.3 c. 0.7 d. 0.9 e. 0.6
Refer to the information provided in Figure 4.6 below to answer the question(s) that follow.Equilibrium in this market occurs at the intersection of curves S and D.
Figure 4.6Refer to Figure 4.6. The area of [A + B + C] represents
A. producer surplus. B. consumer surplus. C. consumer surplus minus producer surplus. D. consumer surplus plus producer surplus.