When the Fed wants to lower the Federal funds rate, it:
A. Increases the discount rate
B. Increases the reserve ratio
C. Buys bonds from banks and the public
D. Sells bonds to banks and the public
C. Buys bonds from banks and the public
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Suppose a factory can be designed to produce either trucks or cars. The figure above shows the marginal cost and marginal benefit of producing trucks in terms of the forgone cars
a. What is the marginal benefit of the 25th truck? b. What is the marginal cost of the 25th truck? c. Should the 25th truck be produced? Why or why not. d. What is the marginal benefit of the 75th truck? e. What is the marginal cost of the 75th truck? f. Should the 75th truck be produced? Why or why not? g. What is the allocatively efficient quantity of trucks?
The Coase Theorem states that ________
A) positive externalities lead to higher market prices B) negative externalities lead to lower equilibrium output C) transaction costs are higher in free markets D) negotiation between economic agents leads to an efficient allocation of resources