Answer the following statements true (T) or false (F)
1. The relationship between the price of a book and the number of volumes purchased would be an example of microeconomics.
2. Some economic principles are based on physical phenomena.
3. If I stand up at a football game, I can see better. But if we all stand up, we block each other’s view. This is an example of the fallacy of composition.
4. The basic function of any economic system is to provide the framework for allocating scarce resources in a way that adequately satisfies unlimited wants.
1. TRUE
2. TRUE
3. TRUE
4. TRUE
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
Which of the following is a disadvantage of government provision of a public good such as national defense? (i) The government does not know the exact willingness of consumers to pay for the public good. (ii) The free-rider problem is more likely to occur when the government provides a public good than when the private sector provides a public good. (iii) Taxpayers do not agree on the optimal
quantity of the public good that the government should provide. a. (i) only b. (i) and (ii) only c. (i) and (iii) only d. (i), (ii), and (iii)
For a large group of individuals, the proportion of people who will have accidents is
A. extremely unstable. B. extremely predictable. C. always constant. D. extremely unpredictable.
The essential feature of the market mechanism is the price signal.
Answer the following statement true (T) or false (F)