For each of the following decide whether the statement is true, false or uncertain and explain why. Your explanation determines your grade; you will receive no credit for an answer without an explanation.
1. Since positive externalities do not harm participants outside the market, there is no rationale for government intervention
2. An increase in demand in a perfectly competitive market will cause all firms to earn positive economic profits in long-run equilibrium.
3. Image Steve is a utility maximizing consumer who purchases music downloads and books. If the price of books decreases, Steve will consume more books and fewer music downloads.
4. As a result of technological improvements, the cost of extending life expectancy declined steadily in the US during the 20th century.
For each of the following decide whether the statement is true, false or uncertain and explain why. Your explanation determines your grade; you will receive no credit for an answer without an explanation.
1. Since positive externalities do not harm participants outside the market, there is no rationale for government intervention
2. An increase in demand in a perfectly competitive market will cause all firms to earn positive economic profits in long-run equilibrium.
3. Image Steve is a utility maximizing consumer who purchases music downloads and books. If the price of books decreases, Steve will consume more books and fewer music downloads.
4. As a result of technological improvements, the cost of extending life expectancy declined steadily in the US during the 20th century.
