If private bargaining to resolve an externality is to result in an efficient outcome,
A. the initial assignment of rights must be clear to both parties.
B. there must be direct regulation of externalities.
C. rights must be protected by liability rules.
D. there must be tradable pollution rights.
Answer: A
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Three candidates for political office disagree over the benefits of enlarging the federal budget deficit
Candidate C says the stimulation package is needed to increase employment and real GDP; Candidate D says it will only cause higher prices; and Candidate F says it will have no effect on either real GDP or the price level. How do the three candidates differ with respect to the condition of the economy and the effects of fiscal policy? A) Candidate C thinks the simple Keynesian model is applicable, while D thinks the expansionary policy will fully crowd out private investment. F believes the economy is experiencing a recessionary ga
The fact that movie star Angelina Jolie's salary is much higher than the salary earned by the world's best nurse can best be explained by the
a. failure of the market to reward talent fairly. b. large number of nurses. c. willingness of some people to accept a lower wage rate in order to do work they find personally rewarding. d. superstar phenomenon.
If Japan's Real GDP rises, this tends to _________________ United States exports, shifting the United States AD curve to the __________________
A) raise; right B) raise; left C) lower; right D) lower; left
A student buys only two goods pizza and books. The price of pizza is $5 and the price of books is $10. At the student's present level of consumption, her marginal utility of pizza is 4 and her marginal utility of books is 2. Currently, the student is spending all her income.A. Is this student currently in consumer equilibrium (maximizing utility)? Explain using a graph.B. What would this student have to do in order to increase her utility? Use the diagram from part (a) to explain your answer.
What will be an ideal response?