When the production of a good creates an external cost, to achieve the efficient quantity governments can set taxes (T) such that ________.
A) MSC = MC + T
B) MC = MSC + T
C) T = MC + MSC
D) MSC = MC - T
Ques. 2If a good is produced using inputs for which there are no substitutes, the good's
A) elasticity of supply is likely to be small.
B) elasticity of supply is likely to be large.
C) elasticity of demand will be small.
D) elasticity of demand will be large.
Ques. 3The table above shows sales of the firms in the chocolate industry. The Herfindahl-Hirschman Index in the industry is
A) 1346.
B) 896.
C) 1160.
D) 2588.
Ques. 4If human capital was included in the measurement of wealth, the measurement of wealth would be
A) more equal and more accurate.
B) more equal and less accurate.
C) less equal and more accurate.
D) less equal and less accurate.
Ques. 5Household consumption depends on both income and interest rates. In the above figure
A) household consumption is held constant.
B) interest rates are held constant.
C) household income is held constant.
D) no variable is held constant.
Ques. 6The table above shows some data for Wiland, a country whose currency is the bont. The official settlement balance, net interest income, and net transfers from abroad are zero.
a) What is Wiland's imports of goods and services?
b) What is Wiland's current account balance?
c) What is Wiland's capital account balance?
d) What is Wiland's net taxes?
e) What is Wiland's private sector balance?
Ques. 7In the above figure, if the price is 16 per unit, a profit maximizing perfectly competitive firm will
A) shut down.
B) incur an economic loss but continue to operate.
C) make zero economic profit.
D) make an economic profit.
Ques. 8Bobby is offered two fulltime jobs. In the first job, as a salesperson, he has a 50 percent chance to make 2,000 a month and a 50 percent chance to make 10,000 a month. The second job, as a construction worker, pays 4,500 a month with certainty.
Bobby's utility of wealth curve is shown in the figure above. Bobby will take the ________ job because his expected ________ from this job is greater. A) first; utility
B) second; utility
C) second; income
D) first; income
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