What are four significant reasons for studying resource pricing?
What will be an ideal response?
First, the prices of resources (land, labor, capital, and entrepreneurial ability) are paid as rent, wages, interest, and profit, and thus determine nominal incomes. To understand why people earn the incomes they do requires an understanding of how resource prices are determined. Second, prices for resources allocate scarce resources among competing uses in a market economy. Efficient allocation of resources requires shifting of resources to their highest valued use in a dynamic economy. Third, expenditures for resources are a cost to businesses. Businesses are continually seeking to minimize the cost of production. Fourth, there are major policy issues related to resource pricing, such as minimum wage laws, interest rate ceilings, and the taxation of resources.
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The view of poverty embraced does not have a direct bearing on what public policies ought to be pursued
Indicate whether the statement is true or false
In the long run, the beneficiaries of farm price supports are
a. tenant farmers b. consumers c. taxpayers d. milk drinkers e. early owners of specialized resources
In the middle of a severe recession, Congress passes an increase in the level of unemployment benefits. This would be considered by economists as a
a. positive tax. b. negative tax. c. form of government purchases. d. variable tax.
A theory of fairness that holds that taxpayers should contribute to the government in proportion to the benefits they receive from public expenditures is the
A. benefits-received principle. B. equality-for-all principle. C. equity principle. D. ability-to-pay principle.