If there is a negative externality associated with the production of chewing gum, then the most efficient allocation of resources in gum production occurs at the intersection of the
a. demand curve and the private cost curve
b. demand curve and the externality curve
c. demand curve and the social cost curve
d. social cost curve and the private cost curve
e. private cost curve and the externality cost curve
C
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Suppose that during 2009, the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos. What sort of equilibrium existed in Chile?
What will be an ideal response?
When the Fed buys U.S. government securities, the money supply
A) increases because there is an increase in transaction deposits at the bank of the bond dealer but there is no decrease in transaction deposits at any other bank. B) decreases because there is an increase in the reserves of the bond dealer's bank. C) remains unchanged because the increase in transaction deposits at the bond dealer's bank is offset by a reduction in transaction deposits at the Fed. D) remains unchanged because the increase in transaction deposits at the bond dealer's bank is offset by a fall in transaction deposits at another bank.