External costs are
a. negative externalities and are subtracted from marginal private costs to find marginal social costs.
b. negative externalities and are added to marginal private costs to find marginal social costs.
c. positive externalities and are added to marginal private costs to find marginal social costs.
d. positive externalities and are subtracted from marginal private costs to find marginal social costs.
b. negative externalities and are added to marginal private costs to find marginal social costs.
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The difference in present value between a perpetuity that promised $1 per year starting today and one that promised $1 per year starting next year is
a. 0. b. $1. c. $1/(1 + r). d. $r/(1 + r).
Each member of a cartel
a. faces a temptation to cheat on the agreement because lowering its price slightly below the established price will usually increase the firm's sales and profit. b. faces a temptation to cheat on the agreement because raising its price slightly above the established price will usually increase the firm's sales and profit. c. has no temptation to cheat on the agreement because lowering its price slightly below the established price will usually have no impact on the firm's sales and profit. d. has no temptation to cheat on the agreement because raising its price slightly above the established price will usually decrease the firm's sales and profit. e. has no temptation to cheat on the agreement because lowering its price slightly below the established price will usually lower the firm's sales and profit.
Cab drivers operating from JFK Airport to the City of New York legally must charge a specific fare. This is an example of
A) social regulation. B) economic regulation. C) the market share test. D) the rate of return test.
Economic rent serves
A) a descriptive function by making some wealthier than others, but serves no allocative function. B) an allocative function by guiding available supplies to the most efficient use. C) only to make the rich richer and the poor poorer. D) no useful function in a modern economy.