Medical research helps to develop better treatments for neuromuscular disease. Medical researchers are constantly in search of funds. Many in the public, however, are unwilling to contribute money toward neuromuscular disease research until a member of their own family suffers from a neuromuscular ailment. If left strictly to the private market, it is likely that there will be:
a. an
overallocation of resources to neuromuscular disease research, relative to the efficient level.
b. an underallocation of resources to neuromuscular disease research, relative to the efficient level.
c. an efficient quantity of resources devoted to neuromuscular disease research.
d. an efficient quantity of resources devoted to neuromuscular disease research.
b
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Which of the following statements concerning equilibrium in the long run is not true?
a. Most firms earn economic profits in the long run. b. The firm can vary its plant size in the long run. c. Economic profits are eliminated as new firms enter the industry in the long run. d. For firms in long-run equilibrium, P = MC = AC.
If an agricultural price support keeps a price above the equilibrium market price,
A. There will be redistribution of income from the government to consumers. B. More resources will be devoted to agriculture than are optimal. C. There will be positive market feedback leading to even higher prices. D. Shortages of agricultural products will result.