When negative externalities are present, it leads to an underallocation of resources in that area relative to that which is socially desirable

Which of the following is TRUE regarding perfect competition? I. The firms are price takers. II. Marginal revenue equals the price of the product. III. Established firms have no advantage over new firms

A) I and II B) II and III C) I, II and III D) I only

Suppose the current level of output is 5000. If the elasticities of output with respect to capital and labor are 0.3 and 0.7,

respectively, a 10% increase in capital combined with a 5% increase in labor and a 5% increase in productivity would increase the current level of output to A) 5015. B) 5325. C) 5575. D) 6000.