Why is a point below the production possibilities curve less efficient than a point on that curve?
What will be an ideal response?
Ques. 2Of the following nations, the country with the highest saving rate is
A) the United States.
B) Japan.
C) Mexico.
D) Ethiopia.
Ques. 3If the price of a product increases, we would expect
A) the level of demand to decrease.
B) quantity supplied to increase.
C) the level of supply to increase.
D) an increase in quantity demanded.
Ques. 4The problem of dead capital can be eliminated by
A) changing the structure of import tariffs.
B) increasing the labor force participation rate.
C) making it easier for people to establish legal ownership of productive capital.
D) restricting population growth.
Ques. 5Legislated federal government payments that anyone who qualifies can receive are called
A) controllable expenditures.
B) a fiscal stabilizer.
C) balanced expenditures.
D) entitlements.
Ques. 6A monopolistic competitor behaving in a profit-maximizing way will
A) not advertise.
B) advertise as much as it can in order to increase its sales.
C) advertise to the point where the additional sales from advertising equal the additional marginal costs of the product.
D) advertise to the point where the additional revenue from one more dollar of advertising just equals the extra dollar cost of advertising.
Ques. 7In the spring, I enjoy the fragrance coming from my neighbors' flowers. The fragrance is is an example of
A) a negative externality.
B) a private good.
C) the need for antitrust legislation.
D) a free rider problem.
Ques. 8Explain what is meant by economic efficiency. Does efficiency imply that the fastest production processes or the most powerful equipment must always be used? Explain.
What will be an ideal response?
Quick Reply
