One difficulty in using voluntary transactions to internalize externalities is that
A. people are motivated by self-interest and are often unwilling to engage in a transaction that might make another person better off.
B. people usually don't understand what the real opportunity costs are that they face.
C. transaction costs of coming to an agreement can be very large when numerous people are involved.
D. the government usually will not enforce contracts of this type.
Answer: C
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Demand is said to be elastic when percentage changes in quantity demanded are
A. less than the percentage changes in price. B. higher than the percentage changes in price. C. equal to the percentage changes in price. D. zero when price changes.
Why is it important to use real GDP rather than nominal GDP figures when making comparisons of output across time periods?
a. The real GDP figures are a better measure of changes in the general level of prices. b. The real figures will reflect changes in the quantity of output and not changes in the general level of prices. c. The real figures will reflect changes in the general level of prices as well as changes in the quantity of output. d. The real GDP figures adjust for changes in the level of employment.
If parties to a contract can anticipate the court's decision in the event of a dispute with some degree of certainty:
a. opportunistic behavior will never be detected. b. opportunistic behavior will be partially detected. c. there will be less room for opportunism. d. only one of the parties will be able to act opportunistically.
The multiplier can be expressed as the ratio of the change in Y over the change in I
a. True b. False Indicate whether the statement is true or false