Suppose you hear of a great deal on a used car and wonder, "Why is the price so low?" This might be an instance of ________
A) tyranny of collateral
B) adverse selection
C) the free rider problem
D) moral hazard
B
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Consider the production of some industrial good that creates air pollution. The table below gives the marginal social cost (MSC), the marginal cost (MC), and the marginal social benefit (MSB) for each level of output (Q)
Q MSC MC MSB 1 3 2 11 2 6 4 10 3 9 6 9 4 12 8 8 5 15 10 7 6 18 12 6 The inefficient market quantity is ________ and the efficient market quantity is ________. A) 4; 3 B) 6; 3 C) 3; 4 D) 4; 6
Suppose the perfectly competitive equilibrium occurs such that too many units of the good are produced. This is an example of
A) marginal cost pricing. B) market failure. C) firms have not yet exited the industry. D) greedy business people behaving in an inappropriate manner.