If we know that the demand curve for good x fails to reflect the total value to society of that good, then we know that
a. the market for good x is characterized by an externality, but we cannot determine whether the externality is positive or negative from this fact alone.
b. the market for good x is characterized by a positive externality.
c. the market for good x is characterized by a negative externality.
d. the supply curve for good x fails to reflect the cost to society of producing that good.
b
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One complication in the process of reducing inflation by creating recessions is that the price level
A. adjusts more quickly to recessionary gaps than to inflationary gaps. B. does not apply as it does in inflationary gaps. C. always rises. D. rarely falls.
Mary Jane is willing to babysit for $6 an hour. Her neighbor has asked her to babysit for $8 an hour. Assuming Mary Jane accepts the offer:
A. her economic rent will be $2 per hour. B. her consumer surplus will be $2 per hour. C. her accounting profit will be $8 per hour, and her economic profit will be $0 per hour. D. her economic profit will be $8 per hour.