If crop dusting on your farm causes your neighbors to have sore throats, then crop dusting is creating
A. external costs.
B. only explicit costs.
C. internal costs.
D. opportunity costs.
Answer: A
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How does the sample size affect the validity of an empirical argument? When is it acceptable to use only one example to disprove a statement?
What will be an ideal response?
The table gives data on interest rates and investment demand (in billions of dollars) in a hypothetical economy.
Refer to the above table. Assume that the public debt is used to expand the capital stock of the economy and that, as a consequence, the investment-demand schedule changes from Id1 to Id2. At the same time, the interest rate rises from 3% to 4% as the government borrows money to finance the public debt. How much crowding out of private investment will occur in this case?
A. $0
B. $100 billion
C. $600 billion
D. $700 billion