Figure 2-8
Assume that U.S. agricultural land is used either to raise cotton for clothing or to grow wheat. Curve FG in represents the current production possibilities frontier for cotton and wheat. What could cause the production possibilities frontier to shift from FG to FH?
a.
a change in government subsidies that favors wheat production over cotton production
b.
development of a new fertilizer that improves production of wheat, but has no impact on cotton production
c.
development of a new fertilizer that improves production of cotton, but has no impact on wheat production
d.
newly reclaimed swampland that is equally suited to growing either crop
e.
newly reclaimed swampland that can be used to grow either crop, but is better suited to growing wheat
b
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In a duopoly game we observe the following payouts: if the two firms collude they will each earn $50,000. If one firm cheats then he earns $60,000 and the other firm earns -$10,000. If both firms cheat then they each earn zero economic profit
In this game what is the Nash equilibrium? A) Both firms cheat. B) Only one firm will cheat. C) Neither firm will cheat. D) It is impossible to say.
Which of the following correctly describes the Lorenz curve?
a. The Lorenz curve shows that the increasing income inequality in the U.S. society is actually good for the economy. b. The Lorenz curve shows the growth rate in real median family income over time. c. The Lorenz curve shows the cumulative distribution of family income, ranked from the poorest to the richest families, and compares that curve with the straight line indicating perfectly equal income distribution. d. The Lorenz curve shows the cumulative distribution of family income, ranked from the richest to the poorest families, and compares that curve with the ideal of having all income go to the richest 5 percent of society.
An increase in the money wage rate will cause the aggregate supply curve to shift
a. outward, which means the quantity supplied at any price level decreases. b. outward, which means the quantity supplied at any price level increases. c. inward, which means the quantity supplied at any price level increases. d. inward, which means the quantity supplied at any price level decreases.
In most countries, primary and secondary education is the responsibility of the
A. private business sector. B. religious institutions. C. government sector. D. household.