Suppose that cookie producers create a positive externality equal to $2 per dozen. What is the relationship between the equilibrium quantity and the socially optimal quantity of cookies to be produced?
a. They are equal.
b. The equilibrium quantity is greater than the socially optimal quantity.
c. The equilibrium quantity is less than the socially optimal quantity.
d. There is not enough information to answer the question.
c
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People always face trade-offs because
A) they always have more than one use for their time and money. B) they buy goods with money. C) trading takes place in a market economy. D) they can make themselves better off through trade.
Quick conclusions about the behavior of real per student spending must be made with care because
A. less money is spent on special education and less is also spent on everything else. B. though more money is spent per student, an increasing share goes to non-instructional needs. C. more money is spent on special education and less is spent on everything else. D. more money is spent on non-instructional needs and less is spent on instruction.