When a good is not excludable but is rival in consumption the:
A. free rider problem may arise.
B. tragedy of the commons may arise.
C. good is likely a private good.
D. good is likely a common resource.
B. tragedy of the commons may arise.
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Suppose the government wants to increase the price of a specific agricultural product. Discuss the welfare effects of four possible policies: price floor, price support, production quota and voluntary production reduction. Which policy is least efficient? Discuss the differences in the benefits to farmers and the cost to the government.
What will be an ideal response?
Which of the following best describes a tradeoff?
a. An office executive enrolling into a management course to develop her skills. b. An investor buying stocks of a start-up company. c. A businessman investing a portion of company's profit in research and development. d. A college student sacrificing a few hours of study time to work at the town cafeteria. e. A worker purchasing a new car with her bonus earnings.
The main difference between a monopsonist and a competitive buyer of labor is that
A. the competitor is a small firm while the monopsonist is a large firm. B. the competitor is also a competitor in product markets while the monopsonist is also a monopoly in product markets. C. the competitor can hire as many workers as it wants at the going wage while a monopsonist can force wages down when hiring additional workers. D. the competitor can hire as many workers as it wants at the going wage while a monopsonist must raise wages to hire additional workers.
In Figure 15.3, the Fed can change the equilibrium interest rate from 2 percent to 6 percent by
A. Increasing the amount of coins in circulation. B. Decreasing the reserve requirement. C. Raising the discount rate. D. Buying bonds in the open market.