If a good is produced by firms that incur all private and external costs, the price consumers pay
A) will be efficient since it includes all social costs.
B) will be too low.
C) will be too high because the consumers end up paying all of the costs instead of the firm.
D) will be the correct price, but inefficient.
A
You might also like to view...
Jennifer Borts moves her office from the premises she rents at a local mall to her home. As a result of this move
A) Jennifer's explicit costs fall and her implicit costs rise. B) Jennifer's total costs fall. C) Jennifer's implicit costs fall. D) Jennifer's opportunity costs fall.
Use the following table to answer the next question. The money supply and investment are in billions.Money Supply (billions of dollars)Interest RateInvestment (billions of dollars)$507%$100606110705120804130903140Assume that the MPC is 0.9 and the reserve requirement is 0.2. If the Federal Reserve needs to decrease aggregate demand by $100 billion at each price level to move the economy back to full employment and the current interest rate is 4%, then the Federal Reserve should ________ bonds on the open market equal to ________.
A. sell, $2 billion B. sell, $4 billion C. buy, $2 billion D. buy, $4 billion