Suppose That the ABC Industry Produces a Good That Results

question 110

Multiple Choice

Suppose that the ABC industry produces a good that results in significant spillover costs to society.Such production suggests that:

• A) resources are underallocated to the industry.
• B) resources are overallocated to the industry.
• C) the firms in this industry are not maximizing profits.
• D) at the market price,quantity demanded is less than quantity supplied.

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Definitions:

Loans

Borrowed sums of money that must be repaid with interest over a predetermined period.

Reserve Ratio

The portion of depositors' balances that banks must have on hand as cash, set by central banking authorities to ensure liquidity and stability in the banking system.

Additional Reserves

The excess funds that banks hold over the required minimum to meet reserve requirements set by a central bank.

Money

An economic unit that functions as a generally recognized medium of exchange for transactional purposes in an economy.