If a negative externality is associated with burning firewood:
A. less than the efficient amount of firewood for burning will be used each year.
B. the marginal social cost of burning firewood falls short of its price.
C. the marginal social cost of burning firewood exceeds the price of burning firewood.
D. the marginal social cost of burning firewood is exactly equal to its price.
Answer: C
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Over the past year, productivity grew 2%, capital grew 1%, and labor grew 1%. If the elasticities of output with respect to capital and labor are 0.2 and 0.8, respectively, how much did output grow?
A) 1% B) 2% C) 3% D) 4%
Suppose that the U.S. personal income tax was eliminated and replaced with a fixed tax that raised the exact same amount of revenue. The multiplier would be
A. larger. B. unchanged. C. smaller. D. incalculable.
When economists discuss the nominal value of an economic variable, the variable is
A. expressed as an index figure. B. expressed as a percentage. C. expressed in current dollars. D. adjusted for a changing price level.
When a good is illegal, the supply curve is likely to be inelastic because
A. the difficulty of expanding operations as price rises because of the increased likelihood of capture. B. extra costs associated with avoiding capture. C. the ease of finding new buyers without getting caught. D. the ease with which sellers can expand operations into new territory when price rises.