The basis of the argument favoring government intervention to correct informational and rationality problems is that:
A. entry into certain markets may be restricted so that excess profits cannot be eliminated by the forces of competition.
B. if information is not perfect or if one trader is not rational, a trade can result in one party benefiting and the other losing.
C. people cannot possibly know how well off they will be as a result of a trade until after the trade has occurred.
D. if individuals are free to produce whatever goods they want, when excess profit is being made, more people will enter into the production of that good and consumers will benefit as the price is pushed down.
Answer: B
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Which of the following could lead to an inward shift of the production possibilities frontier?
a. an increase in the cost of one good b. an increase in the utilization of resources c. a rise in the level of technology d. a law is passed whereby a mandatory retirement age of 60 is imposed e. a decrease in the utilization of resources
During a major war between two oil producing nations, there would likely be
a. an increase in the price of oil because the supply of oil would decrease. b. an increase in the price of oil because the supply of oil would increase. c. a decrease in the price of oil because the supply of oil would decrease. d. a decrease in the price of oil because the supply of oil would increase.
If there is a technological advance that lowers the cost of producing x-ray machines, then we can say that the
A. quantity supplied of those machines will go up. B. quantity demanded for those machines will increase. C. demand for those machines will shift right. D. quantity supplied of those machines will decrease.
Government's unfunded liabilities:
A. result from the political bias toward immediate benefits and deferred costs. B. result in more efficient policies in an attempt to satisfy these liabilities. C. are caused primarily by market failures. D. only occur in democratically elected governments.