If it's possible to eliminate the problems created by externalities, why do they persist?
A. The benefits of correcting the externalities generally exceed the costs.
B. Correcting externalities would always reduce total surplus.
C. It is difficult to measure external benefits and costs.
D. None of these statements is true.
Answer: C
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The above figure shows the U.S. market for flip-flops. With international trade, U.S. consumers buy ________ flip-flops and U.S. producers produce ________ flip-flops
A) 500,000; 500,000 B) 300,000; 700,000 C) 700,000; 500,000 D) 700,000; 300,000 E) 500,000; 300,000
The benefit to some consumer of the last unit of a good consumed is
a. represented by the height of the supply curve at that quantity b. negative if the producer is suffering economic loss c. decreases at an increasing rate in a competitive product market d. is zero e. represented by the height of the demand curve at that quantity