In order for a central planner to achieve the invisible-hand type efficiency of a free market, the planner would
A. need masses of statistics.
B. be required to makes enormous calculations.
C. need to be able to measure a consumer’s marginal utility in order to equate MU with MC.
D. All of the above would be required.
Answer: D
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Fred enjoys smoking cigars, but his wife Wilma feels ill whenever she is around cigar smoke. Use the Coase theorem to explain how this problem could be solved without government involvement
What will be an ideal response?
An increase in the value of the marginal product of labor has the effect of increasing the
a. demand for labor. b. wage. c. quantity of labor employed. d. All of the above are correct.
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In Exhibit 3-16, if the market price of chairs is initially $15, a movement toward equilibrium would require:
A. ?no change, because an equilibrium already exists. B. ?the price to fall below $15 and both the quantity supplied and the quantity demanded to fall. C. ?the price to remain the same, but the supply curve to shift to the left. D. ?the price to fall below $15, the quantity supplied to fall, and the quantity demanded to rise.?
There are three goods you are interested in purchasing, X, Y and Z. You notice that the price of Z has fallen. Given that the cross price elasticity between Z and Y is ?1.5; the cross price elasticity between Y and X is 3.0, and the cross price elasticity between Z and X is 0.50. It would make sense that:
A. Z and X are complements; Y and X are substitutes. B. Y and X are substitutes; Y is complementary to Z. C. X and Z are unrelated; Y is complementary to X. D. X and Z are complements; Y and Z are substitutes.