On the Fourth of July, there is no fireworks display in the small town of Yankeeville, even though it would be efficient for such a display to be produced. Which of the following statements is correct?
a. The lack of a fireworks display in Yankeeville arises because of an externality.
b. The lack of a fireworks display in Yankeeville is a case of market failure.
c. In deciding not to produce a fireworks display in Yankeeville, private individuals and private firms made decisions that were privately rational but socially inefficient.
d. All of the above are correct.
d
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One characteristic of a Giffen good is that it
A) is a luxury good. B) is an inferior good. C) has an upward-sloping Engel curve. D) All of the above.
The exchange rate is
a. the rate at which one currency is traded for another b. always constant c. the tax a foreign nation imposes to change its currency into dollars d. irrelevant to those who do not travel to foreign countries e. controlled by the Federal Reserve