An externality refers to the idea that
A) explicit costs differ from implicit costs.
B) decision-makers do not internalize all the costs.
C) we cannot do anything that does not affect other people.
D) private and internal costs differ.
Answer: B
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A change in the price of one good results in a rotation of the budget line around the point at which the consumer is currently consuming, so that it is steeper or flatter.
Answer the following statement true (T) or false (F)
If society were to maximize the utility of its worst-off member, the final allocation would most likely be
A) relatively egalitarian. B) on the contract curve. C) Pareto efficient. D) one in which one person gets everything.
In long-run equilibrium, a profit-maximizing firm in a monopolistic ally competitive industry will produce the quantity of output where:
A. ATC = P, MR = MC = P
B. ATC
The transformation of an invention into something that benefits the economy is known as
A) a compounder. B) an externality. C) an innovation. D) a patent.