Which of the following statements is false?
A. Government can remove individuals from a prisoner's dilemma setting and make them better off.
B. In a prisoner's dilemma setting, it is impossible for the government to define and enforce property rights that the individuals involved in the setting want to have defined and enforced.
C. As long as government charges each individual in a prisoner's dilemma setting a tax that is less than the gain received by being removed from the setting, then government has made the individuals better off.
D. Depending upon the amount of the tax charged to each individual in a prisoner's dilemma setting, the government can make both persons better off, both persons worse off, or one person better off and the other person worse off.
Answer: B
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A recent study showed that an increase in the price of gasoline promoted carpooling among office commuters. If gasoline is an important component in the fixed basket of goods used to calculate the Consumer Price Index, it will fail to reflect true changes in the cost of living of an average consumer because of the: a. quality bias
b. substitution bias. c. new good bias. d. quantity bias.
Exhibit 10-1 Aggregate supply curve
In Exhibit 10-1, higher price levels allow producers to earn higher profits, stimulating production and employment in:
A. the segment labeled ab. B. the segment labeled bc. C. the segment labeled cd. D. both segment bc and segment cd.
Pollution imposes costs on people and firms other than those involved in producing or consuming the product that produces pollution.
Answer the following statement true (T) or false (F)
Holding all else constant, an increase in preferences by Mexicans for U.S. goods will ________ the demand for dollars in the foreign exchange market and ________ the equilibrium Mexican peso/U.S. dollar exchange rate.
A. increase; decrease B. increase; increase C. decrease; decrease D. decrease; increase