Refer to the data. If the marginal cost of producing this good at the optimal quantity is $4, the optimal quantity must be:
Answer the question on the basis of the following information for a public good. P a and P b are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it. These people are the only two members of society.
A. 1 unit.
B. 2 units.
C. 3 units.
D. 4 units.
C. 3 units.
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The accepted philosophy on U.S. federal deficits prior to the Great Depression was that: a. the budget should be balanced cyclically
b. a budget deficit does not matter as long as the economy is at full employment. c. the budget should be annually balanced. d. deficits dampen aggregate demand in the short run and reduce the federal debt. e. spending decreases during expansions and increases during recessions.
In the circular-flow diagram, in the markets for
a. goods and services, households and firms are both sellers. b. goods and services, households are buyers and firms are sellers. c. the factors of production, households are buyers and firms are sellers. d. the factors of production, households and firms are both buyers.