Classical macroeconomic theorists believed that economic downturns:
A. would not end quickly without government intervention.
B. could be completely eliminated through increased government spending.
C. would not lead wages to fall.
D. would generally reverse themselves quickly without policy intervention.
Answer: D
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Who ends up paying when sunk costs are incurred as a result of erroneous forecasting?
A) No one pays them because they are sunk. B) The consumer, because they eventually show up as higher prices. C) The government, since they fall evenly on the entire community. D) The taxpayer, because they produce a decline in assessed valuations. E) Whoever invested in the unsuccessful project.
Which of the following can be a solution to the lemons problem?
a. Providing testimonials from previous buyers. b. Providing accessories to be used in the car. c. Providing discount on the purchase of a car. d. Providing a warranty that covers the costs of certain repairs.
Price elasticities of supply are always
a. equal to price elasticities of demand when the market is in equilibrium b. negative c. positive d. greater than one e. less than one
Cindy discovers that when she goes to the beach, she does not have to bring her radio. She can put her blanket near someone who has a radio and listen all day (without having to carry her radio, get sand in her speakers, or buy new batteries). She's delighted. This is an example of
a. private property abuse b. an externality cost to the person who has the radio c. a negative externality enjoyed by Cindy d. a positive externality enjoyed by Cindy e. a public good