Inefficiency occurs when an economy is operating outside its production possibilities curve.
a. true
b. false
Ans: b. false
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The proposition that the outcome of a majority vote is likely to represent the preferences of the voter who is in the political middle is called
A) the mean (or average) voter theorem. B) the median voter theorem. C) the voting paradox. D) the Arrow impossibility theorem.
What are three reasons that banks charge interest on loans?
What will be an ideal response?
In the above figure, market equilibrium at point E yields the quantity X. The quantity is the socially optimal quantity. Point E indicates that currently there is
A) a negative externality. B) a positive externality. C) a public good. D) a positive externality with subsidy.
Figure 2-9
Assume that the publishing industry produces novels and textbooks, as shown in the production possibilities frontier in . Moving from point H to G, the opportunity cost of those five additional textbooks equals
a.
0.5 novels
b.
10 million novels
c.
3 novels
d.
8 novels
e.
2 novels