Which of the following correctly describes the relationship between economic efficiency and economic equity?
A) There is often a trade-off between the two.
B) There is no conflict between the two goals.
C) They always call for opposite outcomes.
D) They are both automatically achieved in a free market economy.
A
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An increase in the interest rate
A) lowers the present value of future revenue. B) increases the present value of future revenue. C) has no effect on the present value of future revenue. D) shifts the demand curve for capital leftward.
The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income
a. True b. False Indicate whether the statement is true or false
Which of the following would be counted as a final good for inclusion in GDP?
a. A piece of glass bought this year by a consumer to fix a broken window. b. A sheet of glass produced this year by Ford for windows in a new car. c. None of these choices would be counted in GDP. d. A tire produced this year and sold to a car maker for a new car sold this year.
A market equilibrium:
A. is never socially optimal. B. might not maximize total economic surplus. C. is socially optimal. D. leaves unexploited opportunities for individuals.