You have noticed that your next-door neighbor, Mary, always works in the garden, and her husband, Joe, always walks the dog. You conclude that if Joe and Mary are efficient, then it must be the case that:
A. Mary has an absolute advantage in gardening.
B. Joe experiences increasing opportunity costs when he gardens, but not when he walks the dog.
C. Joe has a comparative advantage in walking the dog.
D. Mary's opportunity cost of walking the dog is lower than Joe's.
Answer: C
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File-sharing programs such as Napster, Kazaa, and iMesh make it possible for individuals to exchange music files over the Internet
All else constant, which of the following statements best describes how the development of these programs has affected the retail market for new music CDs? A) Demand for CDs has decreased, causing equilibrium price and quantity to decrease. B) Demand for CDs has increased, causing equilibrium price and quantity to increase. C) Demand for CDs has decreased, causing equilibrium price to decrease and equilibrium quantity to increase. D) Demand for CDs has increased, causing equilibrium price to increase and equilibrium quantity to decrease.
One method of correcting for ____ externalities is to create a ____ to make sure the market accounts for all costs and benefits
a. market failure; tax b. negative; tax c. positive; mechanism d. positive; tax e. negative; free market
The value of a real option varies with all of the following, EXCEPT:
a. the range of outcomes. b. the rate of interest. c. the rate of unemployment. d. the delay in resolving uncertainty.
Using a toll to reduce traffic when congestion is greatest is an example of a
a. regulation solution. b. command-and-control policy. c. corrective tax. d. Coase theorem solution.