Define a budget set. Is it the same as a budget constraint?
What will be an ideal response?
A budget set is the set of all possible bundles of goods and services that a consumer can purchase with his income. It is not the same as a budget constraint. A budget constraint represents the combination of goods and services a consumer can purchase that exactly exhausts his income.
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The best way to evaluate the effect of a specific tax is _____
a. to consider the tax in isolation b. to consider the tax in the context of the entire tax system c. to consider whether a tax is progressive, regressive, or proportional d. a and c
An efficient allocation of risk among employees and owners must:
A. recognize that pooling of risks is never appropriate. B. recognize that employees have full control over their output. C. take into account that performance-based incentives are the sole important component of an employee's salary. D. take into account that attitudes toward risk differ among different people.
What is the name of the mathematical result showing that no voting system can simultaneously satisfy the properties of unanimity, transitivity, independence of irrelevant alternatives, and no dictators?
a. The fundamental theorem of behavioral economics b. Arrow's impossibility theorem c. The fundamental theorem of voting d. The median voter theorem
When goods are subject to market failure, all of the following are possible solutions to the market failure except:
A. privatize the good. B. have government either regulate the market or provide the good. C. set a very specific consumer quota on consumption. D. change social norms.