Who controls a sole proprietorship?
A) stockholders
B) bondholders
C) the owner
D) all of these
Answer: C
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Frictional unemployment may be economically beneficial if:
A. losses in economic output are small. B. its psychological costs are borne only by the unemployed worker. C. the social costs are limited to smaller tax revenues collected. D. it leads to a better match between worker and job.
Economists believe the most persuasive argument for protectionism is to protect infant industries. But the argument has a drawback. What is this drawback?
A) Governments are usually too impatient and do not allow protection to remain in place long enough to allow industries to be competitive in international markets. B) Protection lessens the need for firms to become productive enough to compete with foreign firms; this often results in infant industries never "growing up." C) Governments usually use tariffs, rather than quotas, to protect infant industries in order to collect tariff revenue. (Quotas do not result in government revenue). D) Governments always make the level of protection for infant industries too high.
In one year, a weapons plant can manufacture either 1,000 more guns or 50 more tanks. The plant's opportunity cost of an extra tank is approximately
a. 20 guns b. 50 guns c. 50 tanks d. 1/50 of a tank e. 1/50 of a gun
Refer to the above supply and demand graph. Point A represents the current equilibrium level of output of this product and point B represents the optimal level of output from society's perspective. This supply and demand graph indicates that there is(are):
A. an overallocation of resources to the production of this product. B. a negative externality from the production of this product. C. spillover benefits to the production of this product. D. spillover costs to the production of this product.