"The optimal level of pollution is zero." Do you agree or disagree? Why?
What will be an ideal response?
Disagree. There are costs to cleaning up pollution. Therefore, the optimal level of pollution arises at the point at which the marginal benefit from further reducing pollution equals the marginal cost of further reducing pollution.
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Which of the following statements about competition in a market is true?
A) Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production. B) Competition forces firms to undercut their selling price, thus benefiting consumers who will be able to purchase products at the lowest price possible. C) Competition forces firms to add only low profit margins to their costs of production. D) Competition forces firms to outsource the production of their labor-intensive products.
In the aggregate expenditures model, if aggregate expenditures (AE) are less than GDP, then GDP increases
a. True b. False Indicate whether the statement is true or false