Is the following a positive or normative statement? The unemployment rate in Nevada is higher than the unemployment rate in New York
positive
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The situation pictured in Figure 6.3
A) is one of increasing marginal returns to labor. B) is one of increasing marginal returns to capital. C) is not consistent with diminishing marginal product of labor or capital. D) shows constant returns to scale. E) shows diminishing marginal products of labor and capital.
Markets and Ocean Fisheries
- In the absence of government regulation, do individuals possess property rights to fish in the ocean?
- Why are many ocean fisheries experiencing significant declines in the harvest of fish? Is this problem related to the existence of property rights?
- Why would a quota on the total catch in a fishery or shortened fishing seasons lead to too much investment in capital and an inefficient use of resources?
- Would the use of individual transferable permits result in a more efficient outcome? Explain.
- No individuals possess property rights to fish in the ocean.
- The significant declines in fish harvests are the result of increasing demand for fish, more effective technologies for catching fish, and the absence of property rights. Each individual receives all of the benefits from catching additional fish, but the cost of a depleted breeding stock is shared by all participants in the fishery.
- If there is a quota on the total catch in a fishery or a shortened season, each individual fisherman has an incentive to catch as many fish as possible in a very limited time. This encourages excessive investment in boats, nets, etc. The same total number of fish would be caught over a longer period of time at a lower cost per fish if neither of these restrictions were in place.
- With individual transferable permits, each fisherman would be able to catch a particular quantity of fish, no matter how long they spend fishing. This would provide for more effective control over the total harvest than under a fishing season of limited duration and would also provide no incentive to invest in too much capital. The sale of fishing permits would result in the most fishing being done by those who have the lowest cost of fishing.
The Fed will make a discount loan to a bank during a crisis:
A. but if the bank doesn't have collateral the interest rate is higher. B. no matter what condition the bank is in. C. only if the bank would fail without the loan. D. only if the bank is sound financially and can provide collateral for the loan.
A common resource is
A. excludable and nonrival in consumption. B. nonexcludable and rival in consumption. C. nonexcludable and nonrival in consumption. D. excludable and rival in consumption.