Which of the following describes how a positive externality affects a competitive market?
A) The externality causes a difference between the private benefit from consumption and the social benefit.
B) The externality causes a difference between the private benefit from production and the social cost of production.
C) The externality causes quantity demanded to exceed quantity supplied.
D) The externality causes a difference between the social cost of production and the social cost of consumption.
Answer: A
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Refer to Scenario 12.2. In this game, Jerome's tough strategy would lead to his preferred equilibrium of
A) Eliza donates a kidney and Jerome does not. B) both Eliza and Jerome donate a kidney. C) Jerome donates a kidney and Eliza does not. D) neither Eliza nor Jerome donates a kidney.
Refer to the table above. What is the marginal rent cost if the firm decides to choose factory Very Close over factory Close?
A) -$100 B) -$200 C) $100 D) $200