When Thelma got home from work today, she read that her country has just achieved economic efficiency. What does this mean for Thelma and her fellow citizens?
a. There will be a little less of everything available to them.
b. The economy will provide the country’s citizens as much as possible.
c. They are wasting resources by working too hard.
d. They will have everything they want made available to them.
b. The economy will provide the country’s citizens as much as possible.
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When a non-discriminating monopolist is maximizing profit, its marginal revenue
a. must be positive b. must be negative c. must equal zero d. may be either positive or negative e. must be upward sloping
In 1989, Hurricane Hugo devastated Charleston, South Carolina, leaving residents with no electricity for light or refrigeration, and completely cut off from the outside world by fallen trees and washed-out roads. Consequently, the price of ice rose 1,000 percent and generators 300 percent. Tree removal firms were charging $4,000 to cut up a single tree. Outraged, the city government enacted an
emergency law prohibiting price "gouging." This law is an example of a. the cost disease of services. b. a price ceiling. c. the laissez-faire rule. d. the indispensable necessity syndrome.
Suppose that you build a high-speed, magnetically powered transportation system from New York to Los Angeles, and you are the only firm providing this service. High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand. Your monopoly would result from:
a. increasing returns to scale. b. technological superiority. c. control of a scarce resource or input. d. government-set barriers.
Which of the following is true about the consumer price index?
A) It accounts for people switching to goods whose prices have fallen. B) It assumes that consumers purchase the same amount of each product in the market basket each month. C) It frequently updates the price changes of new products added to the market basket, as these have a tendency to fall. D) It filters out the part of price increases that occurs because of quality improvements in products.