a country's level of economic freedom is influenced by
What will be an ideal response?
the relative size of government expenditures, taxes, and enterprises
the even-handedness of the court system and security of property rights
freedom to trade internationally
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Why specialize?
A) because assigning each worker a variety of tasks makes her more productive B) It usually increases productivity. C) to decrease our dependence on each other D) There is no economic rationale for specialization.
Why does quantity demanded decrease when price increases?
a. People choose to reduce consumption of the item. b. People "drop out" of the market for the item. c. People find substitutes for the item. d. All of the above are correct.
Ty lives in an apartment building and gets a benefit from playing his stereo. Olivia, who lives next door to Ty and often loses sleep due to the loud music coming from Ty's stereo, bears a cost from the noise. Olivia is threatening to call the police to force Ty to turn down his stereo. Under which of the following conditions would Ty be able to offer Olivia some amount of money to keep her from
calling the police and to allow him to continue to play his stereo loudly? a. The cost of the noise to Olivia must exceed the benefit of the music to Ty. b. The benefit of the music to Ty must exceed the cost of the noise to Olivia. c. The Coase Theorem guarantees that Olivia and Ty will always be able to come to an agreement that keeps Olivia from calling the police regardless of the individual benefits and costs. d. The cost of the noise to Olivia must exceed the benefit of the music to Ty by an amount greater than the transaction costs associated with the agreement.
For a monopolist:
A. price equals average total cost. B. price is above marginal revenue. C. marginal revenue equals zero. D. marginal cost equals zero.