What do economists use the term externalities to refer to?

Question 19 options:

	the shipment of goods and services to foreign nations
	the importation of goods and services from foreign nations
	benefits or costs of actions that spill over onto third parties
	management decisions made outside of one's own department or division

Question 20 (1 point)

Why does the presence of negative externalities lead to a misallocation of societal resources?

Question 20 options:

	because whenever external costs are imposed on outside parties, the good should NOT be produced at all
	because the government always intervenes in markets when negative externalities are present
	because less of the good is produced than is ideal for society
	because the producer fails to take into consideration some costs associated with production

Question 21 (4 points)

In a small town, two restaurants compete in the market for pizza. Each restaurant must decide whether to charge a high price or a low price. The potential monthly profits for these firms are as shown below (in thousands of dollars).

Restaurant B	Restaurant A
	Price Low	Price High
Price Low	18 (B) 12 (A)	30 (B) 70 (A)
Price High	70 (B) 30 (A)	42 (B) 28 (A)

a) Does Restaurant A have a dominant strategy? If yes, what is it? Explain. (2 marks)

b) Does Restaurant B have a dominant strategy? If yes, what is it? Expalin.(2 marks)

TABLE 7-5

Units of Output	Variable Cost (dollars)	Total Cost (dollars)	Marginal Cost (dollars)
0	0	60
1	45	105	45
2	75	135	30
3	90	150	15
4	120	180	30
5	158	218	38
6	225	285	67

Refer to Table 7-5. How much are total fixed costs?

Question 22 options:

	$0
	$45
	$60
	$75