Scenario 10-1 The Demand Curve for Gasoline Slopes Downward and the Supply

question 130

Multiple Choice

Scenario 10-1
The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 400th gallon of gasoline entails the following:
a private cost of $2.83;
a social cost of $3.12;
a value to consumers of $3.23.
-Education yields positive externalities. For example,

• A)colleges and universities have benefited, in recent years, from increases in tuition paid by students.
• B)as a result of earning a college degree, a person becomes a more productive worker and benefits by earning higher wages.
• C)a more educated population tends to result in lower crime rates.
• D)when students go to school, they reinforce the demand for teachers.

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Definitions:

Market Rate

The prevailing interest rate available in the marketplace for loans, deposits, and investments, often influenced by central bank rates and economic conditions.

Contract Rate

The agreed upon rate of interest to be paid on a loan or financial transaction as outlined in a contract.

Premium

The amount by which the cost of a financial instrument or insurance policy exceeds its face value or principal.

Interest Expense

Financial obligations an entity must meet for the use of borrowed capital over a set period.