Medical research that results in a cure for a serious disease produces positive externalities. What is the impact of this positive externality on economic efficiency?
A) At equilibrium, less than the economically efficient quantity of medical research is produced.
B) At equilibrium, more than the economically efficient quantity of medical research is produced.
C) A deadweight loss occurs because at equilibrium the marginal social cost of medical research is greater than the marginal social benefit.
D) A deadweight loss occurs because at equilibrium the marginal social cost equals the marginal social benefit.
A
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Production possibilities frontiers usually curve out and away from the origin. The implication is
A) that as resources are used to produce one good, fewer resources are available to produce another good. B) that the opportunity cost of producing a good goes down as more of that good is produced. C) technological change is present. D) that the opportunity cost of producing a good stays the same regardless of how much of that good is produced. E) some resources are better at producing one good while other resources are better at producing alternative goods.
In the long run, total fixed cost will:
a. remain constant. b. increase. c. decrease. d. not exist by definition.