Because of the free-rider problem,
a. competitive markets will tend to undersupply public goods.
b. the federal government spends too much on national defense.
c. fireworks displays have become increasingly dangerous.
d. poverty has increased.
A
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When a regulatory commission of a public utility, such as an electric company, chooses a fair price as the regulated price, it chooses P = MC
Indicate whether the statement is true or false
The wealth or real balances effect indicates that
A. An increase in the price level will increase the demand for money, increase interest rates, and reduce consumption and investment spending. B. A lower price level will decrease the real value of many financial assets and therefore cause a decline in spending. C. A higher price level will increase the real value of many financial assets and therefore cause a decline in spending. D. A higher price level will decrease the real value of many financial assets and therefore cause a decline in spending.