According to the indifference principle, in the long run if being a teacher is more desirable than being a garbage collector,
a. teachers would be paid a relatively higher salary than garbage collectors
b. teachers would be paid a relatively lower salary than garbage collectors
c. teachers and garbage collectors would both be paid the same wages
d. none of the above
b
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Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 24 units of food per year or 12 units of clothing. Which of the following is true?
a. Alland has both a comparative and absolute advantage in producing food. b. Alland has comparative advantage, but not an absolute advantage, in producing food. c. Georgeland has both a comparative and absolute disadvantage in producing clothing. d. Georgeland has an absolute disadvantage, but not a comparative disadvantage, in producing clothing.
Suppose a new pollution tax of $0.01 per kilowatt-hour of electricity is imposed on coal-fired power producers by the federal government. Which of the following correctly describes how this tax will affect the market for electricity served by these power plants?
a. The supply of electricity will increase. b. The supply of electricity will decrease. c. Demand for electricity will increase. d. Demand for electricity will decrease.
In a free market economy, the decisions of buyers and sellers are:
A. coordinated by the government. B. guided by prices. C. motivated by custom and tradition. D. random.
If you advertise and your rival advertises, you each will earn $5 million in profits. If neither of you advertises, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $15 million and the non-advertising firm will earn $1 million. Suppose this game is repeated for a finite number of times, but the players do not know the exact date at which the game will end. The players can earn collusive profits as a Nash equilibrium to the repeated play of the game if the probability the game terminates in any period is:
A. 1. B. close to zero. C. greater than 1. D. None of the answers is correct.