A paint firm has just announced that it will be building a new plant in a small town that is currently experiencing a high level of unemployment. The new plant will create 500 new jobs in the area and will occupy unused land at the edge of town
The plant will also dump some harmful chemicals into the town's river. From an economic standpoint this dumping of chemicals A) is unimportant since the firm is reducing the unemployment in the region.
B) creates a negative externality.
C) is the production of a public good.
D) creates a positive externality.
B
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
Refer to Figure 3.4. A Nash equilibrium is achieved at which cell(s) in the payoff matrix?
A) only at (North, North) B) only at (South, South) C) at both (North, North) and at (South, South) D) There is no Nash equilibrium.
A firm is likely to pay higher efficiency wages when:
A) it is easy to monitor workers. B) it is not easy to monitor workers. C) workers do not have a tendency to shirk at work. D) the minimum wages are set above the equilibrium wage rate.
One shortcoming of real GDP as an indicator of society's social well-being is that it fails to take into account the:
A. non-market production. B. change in the price level. C. growth in productivity. D. increase in the quantity of goods.