Which of the following applies to the tragedy of the commons? I. In the absence of government action, there is an absence of incentives to prevent the overuse of the common resource. II
When consumers take account of the marginal social benefit and marginal social cost, overuse of the resource occurs. III. Even with government action, it is impossible for an efficient level of output to be achieved. A) I only
B) I and II
C) II and III
D) I, II and III
A
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When the coupon rate on newly issued bonds decreases relative to older, outstanding bonds, what happens?
A) Older bonds will sell for more than their face value. B) Older bonds can still be sold at their face value. C) The market price of the older bond falls in the secondary market. D) The market price of the older bond rises in the secondary market.
Buying a diversified mutual stock fund allows you to
A) completely avoid all types of risk. B) avoid only random, unsystematic risk. C) avoid only systematic risk. D) avoid risk only when all the stock prices are perfectly correlated.