If in market equilibrium the marginal social cost of producing a good exceeds the marginal private cost,
a. not enough of the product is being produced
b. the price charged for the good is too high
c. the good produces a positive externality
d. the good produces a negative externality
e. the government should produce the good
D
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In what way is the result of a subsidy given to either demanders or suppliers similar to the result of a price ceiling?
a. The amount that consumers pay for the good will be less than they previously paid b. The amount of the good that will be traded in the market will be less than previously traded c. both price ceilings and subsidies create excess demand d. The amount that consumers pay for the good will be greater than they previously paid e. both price floors and excise taxes create excess supply
Which of the following characteristics is required for a perfectly competitive market?
a. The goods offered for sale are exactly the same. b. There are so many buyers and sellers that no single buyer or seller has any influence over the market price. c. It is difficult for new sellers to enter the market. d. Both a and b are correct.