Government provide public goods such as national defence because:
a) governments are more efficient than private firms at producing public goods
b) people do not value national defence very highly
c) of the potential that private firms will make excess profit
d) of the free-rider problem which results in underproduction by private firms
Answer: d) of the free-rider problem which results in underproduction by private firms
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The specificfactors model is termed a "shortrun" model because:
a. labor cannot move from one activity to another. b. land resources can move from one activity to another . c. labor can move from one activity to another. d. land and capital cannot move from one activity to another .
In the above figure, the short-run macroeconomic equilibrium is at the price level ________ and the real GDP level ________
A) 110; $16.5 trillion B) 120; $16 trillion C) 100; $16 trillion D) 110; $16 trillion