Refer to the above supply and demand graph. Point A represents the current equilibrium level of output of this product and point B represents the optimal level of output from society's perspective. This supply and demand graph indicates that there is(are):
A. an overallocation of resources to the production of this product.
B. a negative externality from the production of this product.
C. spillover benefits to the production of this product.
D. spillover costs to the production of this product.
Answer: C
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Shaniq has seen two movies this week and two baseball games. Her marginal utility of one more movie is 20 and her marginal utility of one more baseball game is 30. Shaniq will go to a baseball game tonight, rather than to another movie
A) no matter how much more the baseball game costs compared to the movie. B) if the baseball game costs $10.00 and the movie costs $7.00. C) if the baseball game costs $10.00 and the movie costs $5.00. D) Both answers B and C are correct.
Mention some of the ways in which the problem of asymmetric information can be reduced