When the social cost of production is greater than the private cost, we have a
a. positive externality
b. negative externality
c. public good
d. private good
e. positive spillover
B
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An incentive
A) could be a reward but could not be a penalty. B) could be a penalty but could not be a reward. C) could be either a reward or a penalty. D) is the opposite of a tradeoff.
Even when the demand for one good is high, the price of the good is also affected by supply. The textbook illustrates this by comparing the price of two items that were auctioned on the same day
Which of the following describes the results of the auction? A) A letter written by Abraham Lincoln sold for a higher price than a letter written by John Wilkes Booth. B) A letter written by John Wilkes Booth sold for a higher price than a letter written by Lee Harvey Oswald. C) A letter written by Abraham Lincoln was sold for a higher price than a letter written by Adam Smith. D) A letter written by John Wilkes Booth sold for a higher price than a letter written by Abraham Lincoln.