A common resource is used efficiently if
A) the output is maximized.
B) marginal social benefit equals marginal social cost.
C) marginal private benefit equals marginal private cost.
D) marginal social benefit is maximized.
B
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The discount rate is the interest rate that
A) commercial banks charge their customers. B) commercial banks charge each other for the loan of reserves. C) the Fed charges the government for loans. D) the Fed charges commercial banks when it loans reserves to the banks. E) the Fed pays commercial banks on their reserves held at the Fed.
The reason that diamonds cost more than water is
A) the marginal utility of each diamond a consumer purchases is quite high due to the small amount of diamonds that most consumers purchase. B) most consumers consume little water. C) diamonds are more beautiful than water. D) water is a necessity.