Which of the following statements is (are) correct?
(x) An externality is the uncompensated impact of one person’s
actions on the well-being of a bystander.
(y) An example of an externality that causes market failure is the
case of a copper refinery that does not bear the entire cost of the
smoke it emits.
(z) If an externality, such as air or water pollution, is present
in a market, economic efficiency may be enhanced by government
intervention that reduces the presence of the pollution.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (z) only
Causes of market failure include
A. market power and incorrect forecasts of consumer demand.
B. externalities and market power.
C. externalities and foreign competition.
D. incorrect forecasts of consumer demand and foreign
competition.
E. Both A and D are correct
9. A typical worker in Italy can produce 24 units of product in an
8 hour day, where a typical worker in Poland produces 25 units of
product in a 10 hour day. We can conclude that
(x) worker productivity in Poland is higher than in Italy.
(y) the standard of living will be higher in Italy than in
Poland.
(z) productivity for the Polish worker is 2 1/2 units per hour and
3 units per hour for the Italian worker.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only
9) Worker productivity in Italy = 24 / 8 = 3 and in Poland = 25/10 = 2.5. Z is true. X is false. Option d) is true.
Which of the following statements is (are) correct? (x) An externality is the uncompensated impact of...
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