Suppose the cost of producing two goods, x and y, can be represented as C = ax + by + cxy. If there are diseconomies of scope, then which of the following must be TRUE?

What is the relationship between scarcity and shortage, as economists use the terms?

A) Scarcity and shortage cannot exist simultaneously. B) Shortages are the basic cause of scarcity. C) Scarcity creates shortages in the long run. D) Scarcity is relative while shortages are absolute. E) Scarcity is unavoidable but shortages are not.

Assume the production of a good gives rise to external benefits. The government may increase efficiency by

A) subsidizing consumption of the good. B) requiring all producers of the good to be licensed. C) taxing production of the good. D) imposing taxes on the good.