Which of the following creates a positive externality?
a. a paper mill polluting a river
b. a stock market crash
c. a neighbor that beautifies her lawn
d. taxes and subsidies
e. the greenhouse effect
QUESTION 2A profit-maximizing firm will hire units of an input to the point at which
a. MRP > price of the input
b. MRP < MRC
c. MRP = the supply of the input
d. MRP = MRC
e. MRP < the supply of the input
QUESTION 3In order to increase society's well-being, measles vaccinations might be
a. taxed to discourage production
b. subsidized to encourage production
c. taxed to encourage production
d. subsidized to discourage production
e. provided without government intervention
QUESTION 4Marginal resource cost is defined as the
a. total cost of producing a unit
b. total cost of adding one more unit of a resource, other things constant
c. cost of adding one more unit of a resource, other things constant
d. marginal cost divided by the quantity of a resource
e. price of labor
QUESTION 5In order to increase society's well-being, education might be
a. taxed to discourage production
b. subsidized to encourage production
c. taxed to encourage production
d. subsidized to discourage production
e. provided without government intervention
QUESTION 6If an insurance company hires a resource in a perfectly competitive resource market and it wants to maximize profit, it will hire where marginal revenue product equals
a. the price of the resource, which equals its marginal resource cost
b. the price of the resource, which is greater than its marginal resource cost
c. the price of the resource, which is less than its marginal resource cost
d. marginal product
e. the price of the product
QUESTION 7In order to increase society's well-being, a process that produces a positive externality might be
a. taxed to discourage production
b. subsidized to encourage production
c. taxed to encourage production
d. subsidized to discourage production
e. provided without government intervention
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