New York City, which has had a rent ceiling law for more than sixty years, has many abandoned apartment buildings throughout the city. Which of the following explains this?
A) Few workers with jobs in the city want to live in there because of pollution.
B) No building permits for new apartment buildings have been issued for over fifty years.
C) Once any building gets so old, it is abandoned.
D) Landlords have no incentive to finance maintenance and remodeling of apartment buildings.
E) Rent ceilings make the construction of new buildings so profitable that old buildings are simply abandoned.
D
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Fishing, the lumber industry, tourism, and even city buildings in Canada are harmed by acid rain, most of which comes from the United States. According to the Coase theorem, the problem is
a. easy to solve because the United States and Canada are geographically close b. easy to solve because the United States and Canada are allies c. easy to solve because international property rights are recognized among capitalist countries d. hard to solve because international negotiations are more costly than domestic ones e. hard to solve because Canadians have property rights to clean, nonacidic rain
What is an example of a good whose price goes down because of improvements in technology?
What will be an ideal response?
The production function for a competitive firm is Q = K.5L.5. The firm sells its output at a price of $10, and can hire labor at a wage of $5. Capital is fixed at 25 units. The profit-maximizing quantity of labor is:
A. 1. B. 10. C. 2. D. None of the answers are correct.
Answer the following questions true (T) or false (F)
1. In a market with positive externalities, the market equilibrium price will be less than the efficient equilibrium price. 2. Health insurance companies impose deductibles on policies and co-payments on claims to reduce the problem of adverse selection. 3. Adverse selection is a situation in which one party to an economic transaction has less information than the other party.