If a production process generates pollution, then a competitive market will produce more of the good than is socially optimal because
A) firms take all costs into consideration.
B) firms incur all costs of production but ignore some of them.
C) firms ignore the costs of production that they do not incur.
D) firms set price equal to social marginal cost.
C
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Jerome, the florist, sold 500 bridesmaid's bouquets in June. He estimates his costs that month were ATC = $10, AVC = $6, and MC = $9 . If he sold each bouquet at the constant market price of $9, Jerome
a. made an economic profit of $500 b. made a loss of $500 c. made an economic profit of $1,500 d. made a loss of $1,500 e. should have shut down in June
The demonstration effect suggests that people will save less when they
A. control their spending in order to save more when the real interest rate increases. B. recognize that the real interest rate has increased. C. base their spending decisions (and consequently their saving decisions) on spending decisions of others who spend more than they do. D. base their saving decisions on their projections of income and spending needs over their lifetime.