In the absence of externalities, which of the following is true of economic efficiency?
a. It occurs where marginal costs of production equal marginal benefits of consumption.
b. It occurs where quantity supplied is equal to quantity demanded.
c. It maximizes the total net benefits to consumers and producers.
d. All of the above.
e. None of the above.
Ans: d. All of the above.
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If Congress passes legislation reducing Federal Reserve independence, financial market participants are likely to assume that
A) the money supply will decline. B) inflation will increase. C) recession will quickly follow. D) the federal deficit will rise.
Which of the following activities undertaken by a competitive firm can improve its public relations?
a. Investing in assets that cannot easily be redeployed to other uses or locations. b. Donating a portion of its annual profit to hurricane affected families c. Providing good quality products at a high price. d. Investing in in-house research