A market failure arises when an entire sector of the economy (for example, the airline industry) collapses because of some unforeseen event.
Indicate whether the statement is true or false
Ques. 2Colin spends his income of 100 per week on two goods: pizzas (which cost 8 each) and milk (which costs 1 per gallon).
At his current level of consumption, the marginal utility from the last pizza consumed is 32 and the marginal utility from the last gallon of milk is 4 . Is Colin maximizing his utility? Why or why not? If not, what should Colin do to achieve a higher level of utility?
Ques. 3Which of the following statements about the price elasticity of demand is correct?
A) The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good.
B) Demand is more elastic in the long run than it is in the short run.
C) The absolute value of the elasticity of demand ranges from zero to one.
D) Demand is more elastic the smaller the percentage of the consumer's budget the item takes up.
Ques. 4In the United States, corporate profits are taxed
A) at both the corporate level and when investors receive dividends.
B) only when investors receive dividends.
C) only at the corporate level.
D) neither at the corporate level nor when investors receive dividends.
Ques. 5What arguments can be made for government regulation of concentrated markets? What arguments can be made against such government regulation?
What will be an ideal response?
Ques. 6Refer to Figure 10-6. The loanable funds market is given in the figure above. If the current real interest rate is 5 percent, which of the following is true?
A) The quantity of loanable funds being demanded in the market is less than 90 million.
B) The loanable funds market is in equilibrium.
C) There is a surplus of loanable funds in the market.
D) There is a shortage of loanable funds in the market.
Ques. 7Health insurance typically pays for most preventive care procedures in all of the following countries except
A) the United States. B) Canada.
C) Japan. D) the United Kingdom.
Ques. 8What is the difference between a pure strategy and a mixed strategy?
What will be an ideal response?
Ques. 9Suppose country X can produce a personal computer at an opportunity cost of 1000 t-shirts. Assume that country X has a comparative advantage in the production of t-shirts.
Would country X ever agree to terms of trade with country Y such that one personal computer would be exchanged for 1100 t-shirts?
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