In the competitive market for balloon rides, marginal social cost equals marginal social benefit when 3,000 balloon rides a day are taken and the price of a ride is $130. Which of the following statements is TRUE?
A) There is a free-rider problem.
B) Too many rides are available.
C) Too few rides are available and the price of a balloon ride is too high.
D) The efficient quantity of balloon rides is 3,000 a day.
D
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Which of the following is correct about comparative advantage?
A) Some countries will have a comparative advantage in everything. B) A country has a comparative advantage in the production of a good if it can produce the good at lower opportunity cost than any other country. C) Having a comparative advantage without an absolute advantage is impossible. D) A comparative advantage in a good means that the country can produce more of the good than any other country. E) None of the above answers is correct.
Moral hazard is a problem in providing deposit insurance because insured banks are
A) more likely to make bookkeeping errors. B) overly cautious due to extra regulations adopted by the FDIC. C) more likely to provide bank managers with lavish perquisites. D) encouraged to take on more risk.
The price of milk increases. Which of the following is NOT part of the likely chain of events that follows from this price change?
A) Some milk consumers reduce their consumption of milk. B) Milk producers increase their production of milk. C) The producers of feed for dairy cows increase production. D) The manufacturers of milking machines lay off some workers.
Market-oriented economists favor the use of _____ to solve the global warming problem
a. explicit emission targets b. taxes on emissions c. tradable rights d. Both (a) and (b) e. Both (b) and (c)