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A benefit of taxes over regulation to internalize externalities is taxes provide incentives to adopt new methods to reduce the externality. ( )

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Monopolistic competition is considered by some to be inefficient because price exceeds marginal cost. ( )

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Which of the following firms is the closest to being a perfectly competitive firm? ( )

A hot dog vendor in New York.
B. Microsoft Corporation.
C. Ford Motor Company.
D. The campus bookstore.

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What causes the tragedy of the commons? ( )

A. Social and private incentives differ.
B. Common goods are nonrival and nonexclusive.
Common goods are nonexclusive, but rival.
D. Both A and C are correct.

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A television signal is an example of ( )

A. a private good
B. a nonrival good.
C. a social good.
D. a normal good.

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