Why do economists generally favor vouchers to achieve an efficient outcome?
What will be an ideal response?
Economists generally favor vouchers because they allow for competition and they limit the opportunity for overproduction. First, a voucher gives the consumer of the good the buying power, which forces producers to compete for business. Vouchers allow for competition between public producers and private producers. Second, vouchers can also limit overproduction because setting the value of the vouchers and the total voucher budget is transparent so that bureaucrats have less ability to pad their budgets. In addition, vouchers spread the spending over millions of consumers so no one consumer has the incentive to lobby for increased spending.
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If a good is excludable, ________
A) one person's use of the good reduces the amount of the good available to others B) people can be prevented from using the good C) more than one person cannot use the good at the same time D) several people can use the good simultaneously
The marginal productivity principle says that a profit-maximizing firm should
a. hire capital until its marginal product is zero. b. hire labor until another worker costs more to hire than she can earn for the firm. c. hire the quantities of capital and of labor at which their marginal products are equal. d. hire capital until its marginal product is negative.
A three-word synonym for the term ceteris paribus is
A) "nothing else changes." B) "in my opinion." C) "it is proved." D) "under this assumption."
If the government imposes an excise tax on a good equal to $5 per unit and the demand curve for this good is vertical, the supply of this good will shift:
A. downward and the price will decrease by less than $5. B. downward and the price will decrease by $5. C. upward and the price will increase by $5. D. upward and the price will increase by less than $5.