According to the textbook, government price controls fail because:
A. bureaucrats lack accurate market data.
B. firms ignore the price controls.
C. they are not enforced by government.
D. legislation cannot alter basic economic incentives.
Answer: D
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Why is it inefficient for an economy to be inside the production possibilities frontier?
What will be an ideal response?
If productivity growth equals 3.0 percent, the contribution from capital growth 1.2 percent and the contribution from labor growth 2.0 percent, then output growth must equal ________
A) 2.2 percent B) 4.2 percent C) 6.2 percent D) 7.2 percent
The problem of adverse selection in health insurance leads to a situation in which
A) health insurance covers inappropriate items for the population it serves. B) overinsurance of the premium-paying population occurs. C) underinsurance of the premium-paying population occurs. D) the percentage of the premium-paying population that is healthy rises, squeezing unhealthy individuals out of the market. E) the percentage of the premium-paying population that is unhealthy rises, squeezing healthy individuals out of the market.
Which of the following is not a basic characteristic of pure competition?
A. Considerable nonprice competition. B. No barriers to the entry or exit of firms. C. A standardized or homogeneous product. D. A large number of buyers and sellers.