The business activities of Firm A confer positive externalities on Firm B, and the business activities of Firm B confer positive externalities on Firm A. If the two firms merged, then
a. their respective markets would move closer to the social optimum.
b. their respective markets would move further away from the social optimum.
c. total surplus in their respective markets would decrease.
d. the merger would serve as an example of a misguided public policy toward externalities.
a
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A technological advance that increases labor productivity will:
a. lower wages. b. decrease the demand for labor as fewer workers are needed. c. decrease the supply of labor as fewer workers are needed. d. increase the demand for labor as MP rises. e. decrease the demand for labor as MP falls.
Which of the following best describes the concept of laissez-faire?
a. Government should not intervene in the economy b. Government should actively intervene in the economy whenever it judges the action to be beneficial. c. Government should intervene in the economy only to promote short-term economic stability. d. Government should intervene in the economy only to maximize long-term growth rates. e. Government should intervene in the economy only when the economy is not at full employment or there is substantial inflation.