The tables above show the marginal costs and benefits from production of paper. If the market is perfectly competitive and unregulated, the
A) allocation of resources is efficient.
B) market equilibrium produces 800 tons more than the efficient amount.
C) market equilibrium produces 1,600 tons more than the efficient amount.
D) market equilibrium produces 800 tons less than the efficient amount.
B
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Who sells what to whom
A) has been a major preoccupation of international economics. B) is not a valid concern of international economics. C) is not considered important for government foreign trade policy since such decisions are made in the private competitive market. D) is determined by political rather than economic factors. E) is less important than international economic theory.
Assume that an increase in Costa Rica's government budget deficit reduced desired national saving by 10 million colon. Assuming Costa Rica is a small open economy, you would expect the government's action to
A) increase the current account balance by exactly 10 million colon. B) increase the current account balance by less than 10 million colon. C) reduce the current account balance by exactly 10 million colon. D) reduce the current account balance by more than 10 million colon.