An externality is
a. always a benefit to the recipient
b. always a detriment to the recipient
c. an activity that occurs in a business that is unknown to management
d. an unintended benefit or cost imposed on third parties resulting from market activity
e. an act, caused by a firm located in this country, that has an effect on a person in a foreign country
D
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Suppose Jack and Kate are at the town fair and are choosing which game to play. The first game has a bag with four marbles in it-1 red marble and 3 blue ones. The player draws one marble from the bag; if it is red, they win $20 and if it is blue, they win $1. The second game has a bag with 10 marbles in it-1 red, 4 blue, and 5 green. The player draws one marble from the bag; if it is red, they win $20; if it is blue, they win $5; and if it is green, they win $1. Both games cost $5 to play. Kate decides to play the second game. Kate's expected value of payoff is:
A. $5.00. B. $5.75. C. $4.00. D. $4.50.
The long-run aggregate supply curve is vertical at the level of real output that corresponds to the natural rate of employment.
a. true b. false
How are demand-pull and cost-push inflation reflected in terms of the AD-AS model?
What will be an ideal response?
An advantage offered by pollution taxes that is NOT offered by command-and-control policies is that:
A. under pollution taxes, pollution is usually reduced to zero. B. a pollution tax decreases the price of the polluting good. C. under pollution taxes, the government receives tax revenues that may be used to clean up pollution. D. pollution taxes decrease the demand for the good generating the pollution.