Answer the following questions true (T) or false (F)
1. An externality is an example of a market failure.
2. When products that create positive externalities are produced, at the market equilibrium output, the social benefit generated by consuming the product exceeds the private benefit.
3. An external benefit is created when you pursue a college education.
1. TRUE
2. TRUE
3. TRUE
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If a graph shows a negative relationship between two variables which then becomes a positive relationship, this curve would
A) always be an upward-sloping line. B) have a minimum point. C) have a maximum point. D) always be a downward-sloping line.
In Omega the lowest 40 percent of families receive approximately what percentage of income? (See Figure 33.1)
A. 17 percent. B. 40 percent. C. 10 percent. D. 20 percent.
For markets to work well, there must be
a. market power. b. a central planner. c. property rights. d. abundant, not scarce, resources.
Whenever a nation has substantial external debts and assets denominated in foreign currency:
A) it is easier to manage, since changes in value are often offsetting. B) there can be large and destabilizing wealth effects. C) its interest payments on the debt will be matched by interest earnings on the assets. D) the risk of default becomes very large.