Suppose the firms in the chemical industry are allowed, free of charge, to dump harmful products into rivers. How will the price and output of the chemical products in a competitive market compare with their values under conditions of ideal economic efficiency?
a. The price would be too low, and the output would be too large.
b. The price would be too high, and the output would be too large.
c. The price would be too low, and the output would be too small.
d. The price would be too high, and the output would be too small.
A
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If we measure scarcity or abundance correctly, we should use the concept of "effective factor endowment." This means:
a. the actual factor endowment multiplied by the average productivity of workers compared with its share of world GDP . b. trying to find out how much labor and capital are really involved in producing goods competing with imports and exports. c. measuring more effectively a nation's actual factor endowment. d. the actual factor endowment of labor multiplied by the productivity of capital, because, effectively, the productivity of one depends on the quantity of the other.
The problem of "free riders" arises in a society when goods
A) can't be provided exclusively to the people who pay for them. B) cease to be scarce. C) produced by government are provided to everyone. D) supplied by the private sector are paid for from tax revenue. E) wanted by everyone are priced too low.