Economics can best be described as the study of:
A. how people, institutions, and society make choices under conditions of scarcity.
B. how to increase the level of productive resources so there is maximum output in society.
C. how business structures influence the allocation of income among firms.
D. how to use productive resources to maximize income level.
Answer: A
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Answer the following statement(s) true (T) or false (F)
1. An outcome that is Pareto optimal is preferred by both players to all other possible outcomes. 2. A Nash equilibrium need not be Pareto optimal, and a Pareto-optimal outcome need not be a Nash equilibrium. 3. In the Prisoners' Dilemma game, the only outcome that is not Pareto optimal is also the game's only Nash equilibrium. 4. When a game is played sequentially, the first player will have an advantage over the second player. 5. A Cournot equilibrium arises when one player announces his strategy before the other.
An advantage of imposing a tax on the producer that generates pollution is that
A) the government can keep tabs on exactly what is produced in an industry. B) it forces the polluting producer to internalize the external cost of the pollution. C) it will eliminate pollution. D) a producer can pass the cost of the pollution to consumers.
When we study economic growth, we are most concerned about changes in
A) the output ratio. B) the level of natural real output. C) the absolute difference between natural and actual real output. D) None of these.
Related to the Economics in Practice on p. 626: According to a study cited in the Economics in Practice, if a country is relatively far from the technological frontier of the rest of the world, what would be its best strategy?
A. The government needs to keep helping its firms find the world frontier until the firms reach the frontier. B. The government should begin by offering incentives and encourage some risk taking. C. The government needs to help its firms find the world frontier, and then as firms approach the frontier, the government should offer incentives and encourage some risk taking. D. The government should adopt a hands-off approach and let the private sector bring the country to the world frontier.