In 1920 a constitutional amendment was passed that outlawed the production, sale, purchase, and consumption of alcoholic beverages. Prohibition encouraged bootlegging and black markets for whiskey, wine, and beer.
The amendment was eventually repealed in 1933. In 1920, what alternative economic policy was available to the government as a means of reducing alcohol consumption nationwide?
Ques. 2The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. If paper production is 4 tons per week, the outcome is ________.
A) efficient because marginal benefit equals marginal private cost
B) efficient because private and external costs are accounted for
C) inefficient because only marginal external benefits are accounted for
D) inefficient because marginal social cost exceeds marginal social benefit
Ques. 3Explain why the cross elasticity of demand for substitute goods is positive and the cross elasticity of demand for complements is negative.
What will be an ideal response?
Ques. 4Moral hazard and adverse selection are the result of
A) poorly functioning markets.
B) government intervention.
C) private information.
D) treachery.
Ques. 5It was more than a century ago that an engineer named Frederick Taylor walked into factories and starting timing workers with a stop watch. He dissected their movements, and organized them more efficiently.
He turned factory production into a science. Suppose work was completed in the factory based on what the floor manager decided and workers were paid a base daily wage plus a bonus when they produced more than expected. How does this firm organize production? A) through the command system
B) through the incentive system
C) through the market system
D) through a mixed command and incentive system
Ques. 6What leads to a decrease in the quantity supplied of a good or service?
What will be an ideal response?
Ques. 7The distribution of income in the United States became more unequal in the 1990s. One explanation for this trend is that advances in information technologies have ________ low-skilled labor and ________ high-skilled labor.
A) decreased the demand for; increased the demand for
B) increased the demand for; decreased the demand for
C) decreased the supply of; increased the supply of
D) increased the supply of; decreased the supply of
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