The market mix of output and the optimal mix of output are always the same.
Answer the following statement true (T) or false (F)
False
Sometimes markets may fail to achieve the optimal mix of output.
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A negative externality is internalized when __________ until the socially optimum level of production is obtained.
A. supply shifts to the left B. supply shifts to the right C. demand shifts to the right D. b and c E. none of the above
The above figure shows Bob's utility function. He currently has $100 of wealth, but there is a 50% chance that it could all be stolen. Bob is risk averse because
A) his utility function is concave. B) he has diminishing marginal utility of wealth. C) he is willing to pay a premium to avoid a risky situation. D) All of the above.
If the price elasticity of demand is between -1 and - , then demand is inelastic
a. True b. False Indicate whether the statement is true or false
The adaptive expectations hypothesis implies that people
a. adjust their expectations quickly to policy changes. b. expect the next period to be pretty much like the recent past. c. will always be correct in their forecast for the next period. d. change their expectations about the future if policy changes.