Identify whether each of the following transactions will take place in the factor market or in the product market
a. Graciela buys a Tesla Motors Model X.
b. Lashan works 60 hours a week at a law firm.
c. Tito sells his family's farmland to a housing developer.
d. Tesla Motors increases employment at its Fremont, California plant.
a takes place in the product market.
b, c, and d take place in the factor market.
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Free riders often result in
A. overallocation of resources. B. competitive markets. C. scarcity of time. D. market failure.
A worker in Vietnam can earn $6 per day making cotton cloth on a hand loom. A worker in the United States can earn $85 per day making cotton cloth with a mechanical loom. What is the likely explanation for the difference in wages?
a. U.S. textile workers belong to a union, whereas Vietnamese textile workers do not belong to a union. b. There is little demand for cotton cloth in Vietnam and great demand in the U.S. c. Labor is more productive making cotton cloth with a mechanical loom than with a hand loom. d. Vietnam has a low-wage policy to make its textile industry more competitive in world markets.
The government decides to reduce its expenditure by $250. The multiplier in this economy is 4 and the tax rate is 22 percent. The net effect of this contractionary fiscal policy is to:
A. decrease the budget deficit by $30. B. increase the budget deficit by $30. C. decrease the budget deficit by $220. D. increase the budget deficit by $220.
Price elasticity of demand is the responsiveness of
A. demand for a good to a change in the demand for another good. B. demand to a change in income. C. the quantity demanded to a change in price. D. demand to a change in supply.