Compared to ideal economic efficiency, when the production of a good generates external costs, competitive markets will result in an output that is too:

A. large and a price that is too high.
B. large and a price that is too low.
C. small and a price that is too high.
D. small and a price that is too low.

Answer: B

Economics

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Three variables are related and two of them are plotted in a figure. If the variable that is not measured on either the x-axis or the y-axis changes, then there is

A) a movement along the drawn curve. B) no impact on the curve because the variable is not measured on either of the axes. C) a shift in the curve. D) either a shift in the curve or a movement along the curve, but more information is needed to determine which. E) None of the above answers is correct.

Economics

If the fundamental value of the nominal exchange rate equals 0.20 U.S. dollars per franc, but the franc is officially fixed at 0.15 U.S. dollars per franc, then the franc exchange rate is ________ and to maintain this exchange rate there will be ________ in the government's stock of international reserves.

A. undervalued; a net increase B. undervalued; a net decline C. overvalued; a net increase D. overvalued; a net decline

Economics