If the government wanted to ensure that the market reaches the socially optimal equilibrium in the presence of a technology spillover, it should
a. impose a corrective tax on any firm producing a technology spillover.
b. offer tax credits to consumers who are adversely affected by the new technology.
c. subsidize producers by an amount equal to the value of the technology spillover.
d. provide research grants to those firms not currently engaging in research to increase competition in the industry.
c
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Which of the following statements about the classical model of the economy is FALSE?
A) Individuals pursue the public interest, not their own self-interest. B) The economy will always move toward, or be at, full employment. C) Savings and investment will always be equal. D) Wages and prices are flexible.
Adding the quantities demanded by all consumers at every price will yield
A) the market-clearing price. B) the number of consumers. C) the total substitution effect from a price change. D) the market demand curve.