The forces of supply and demand will provide a quantity that is:
A. less than the efficient quantity if a good generates external benefits.
B. more than the efficient quantity if a good generates external benefits.
C. exactly the efficient quantity if a good generates external benefits.
D. either more than or less than the efficient quantity if a good generates external benefits. It is impossible to know whether it will be too much or too little without more information.
Answer: A
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If an alternative provides a benefit of $8 to an individual at a cost of $6, the net benefits of the alternative equal:
A) $0.75. B) $48. C) $2. D) $14.
The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. The tax decreases consumption by
A) 1,000 blouses. B) 2,000 blouses. C) 3,000 blouses. D) 4,000 blouses.