For economists, historical episodes
a. are not worthy of study because they offer few insights into current economic events and problems.
b. are not worthy of study because laboratory experiments provide more reliable data.
c. are worthy of study because economists rely entirely on observation, rather than on theory.
d. are worthy of study because they serve as valuable substitutes for laboratory experiments.
d
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Central planning is a key characteristic of which economic system?
A) free market B) price system C) command and control D) mixed economic system
Which of the following is true?
a. Large corporations earn profits, while smaller firms realize losses. b. Profits attract businesses to productive projects, while losses discourage them from undertaking unproductive activities. c. Profits indicate that businesses are over-charging customers, while losses suggest that they should raise customer prices. d. If corporations want to increase profits, they will always be able to do so by either increasing product prices or reducing employee wages.
Aluminum Aces dumps wastewater into a creek they have owned for decades. The new neighbor, Ms. Franklin, has tried to grow bamboo along the creek where it enters her property, but the wastewater kills about $1,000 worth of her bamboo each year. She offers Aluminum Aces $600 per year to add a new filter, which costs $400, to their system so wastewater will no longer kill her bamboo. Which of the following is true of this situation and necessary for it to fit the Coase theorem?
a. Neither party is worse off than before. b. Property rights are not defined. c. A positive externality is internalized. d. Transaction costs are high.
The problems of externalities and poorly formed property rights are:
A. better solved by private rather than government action. B. the only two legitimate reasons for creating government. C. among several rationales for the existence of government. D. minor in modern economies.