Refer to Figure 5-1. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does S2 represent?
A) the market supply curve reflecting marginal social cost
B) the market supply curve reflecting implicit cost
C) the market supply curve reflecting marginal private cost
D) the market supply curve reflecting external cost
A
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Property rights will help ensure efficient use of a common resource like fisheries, since:
a. property rights can be used to make a good excludable. b. property rights can be used to make a good nonrival. c. property rights will eliminate any negative externality arising from the use of a resource. d. the marginal social cost will be reduced.
Which of the following statements is correct? a. To control the money supply, the Fed relies primarily on the reserve requirement
b. The discount rate is the rate of interest banks charge to their best customers. c. The Fed changes the reserve requirement frequently. d. Because the Fed has no way to earn income, it is dependent upon Congress for appropriations. e. Banks can turn a borrower's IOU into money.