Since Externalities Tend to Keep Markets from Reaching a Socially

question 395

Multiple Choice

Since externalities tend to keep markets from reaching a socially optimal equilibrium, government action

• A)is always needed because private solutions can never be attained.
• B)is needed when private solutions fail to arise.
• C)will be needed only to correct for positive externalities.
• D)will be needed only to correct for negative externalities.

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Definitions:

Long-run Real Wages

The inflation-adjusted income received by workers, taking into account the purchasing power of their earnings over a long period.

Demand for Labor

The total amount of workforce or labor hours that employers in the economy are willing and able to hire at a given wage rate.

Supply of Labor

The total hours that workers wish to work at a given wage rate, reflecting how many people are available to work.

Nominal Wage

The amount of money received by a worker per unit of time (hour, day, etc.); money wage.