Refer to the above figure. Production at Point E
A. would indicate production at a level below that which is attainable.
B. would demonstrate a total lack of technical expertise.
C. would indicate that this economy is producing beyond its capabilities.
D. is not attainable with given resources and technology.
Answer: A
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Adverse selection can arise in employment situations if information about worker quality is:
a. better for employees than employers. b. better for employers than employees. c. perfect. d. available at a low enough cost.
If Santiago thinks the last dollar spent on jeans yields less satisfaction than the last dollar spent on shoes, and Santiago is a utility-maximizing consumer, he should
a. decrease his spending on shoes. b. decrease his spending on shoes and increase his spending on jeans. c. increase his spending on jeans. d. increase his spending on shoes and decrease his spending on jeans.
The time it takes a change in economic policy to induce people and firms to change their behavior is the implementation lag.
Answer the following statement true (T) or false (F)
Suppose a price index is formed to measure changes in the price level between 1989 to 1995. If the price index focuses on the year-to-year costs of the typical market basket purchased in 1989, then the reported price changes
a. seem worse for consumers than they really are. b. seem better for consumers than they really are. c. accurately reflect changes in people's levels of satisfaction. d. may overestimate or underestimate the effects of price changes, depending on whether consumers' indifference curves are relatively flat or steep.