Explain the difficulty with applying the benefits principle and give examples
What will be an ideal response?
The difficulty is that many of the public expenditures are for public goods – national defense, weather satellites, etc. The benefits of public goods fall collectively on all members of society, and there is no way to determine what value individual taxpayers receive from them.
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If Sean thinks that the choice between going to Olive Garden or Red Lobster is simply too confusing, a behavioral economist will explain that Sean is showing ________
A) the endowment effect B) bounded rationality C) bounded self-interest D) bounded will power
Which of the following is not how economists describe the term "economic rent?:
A. The rental price of a factor of production minus the cost of supplying it. B. The producer surplus in output markets. C. The gains that workers and owners of capital receive from supplying their labor or machinery in factor markets. D. The total revenue that a factor of production earns its owner.
Most homeowner's insurance policies contain which of the following clauses?
A) A property improvement clause B) A coinsurance clause C) A co-ownership clause D) A property devaluation clause
Consider two scenarios for a nation's economic growth. Scenario A has real GDP growing at an average annual rate of 1%; scenario B has an average annual growth of 6%. The nation's real GDP would double in about
A. 72 years under scenario A, versus 18 years under scenario B. B. 36 years under scenario A, versus 12 years under scenario B. C. 72 years under scenario A, versus 12 years under scenario B. D. 36 years under scenario A, versus 9 years under scenario B.