The following simultaneous equations describe the demand and supply for a particular good in a competitive market.
Qi= 
1Pi+ 
1zi1 + ui1
Qi= 2Pi+ 2zi2 + ui2
Which of the following are the endogenous variables in this model?
A. Pi,zi1, and zi2
B. Pi and Qi
C. zi1, and zi2
D. ui1 and ui2
Answer: B
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Consider two individuals, Jay and Randy, and their decision to serve in the military. The accompanying tables show their opportunity costs of supplying military service. The government has determined that it needs 12 total hours of military service per week from these two individuals.
(i) Suppose the government drafts Jay and Randy, requiring each individual to serve 6 hours per week and paying them $15 per hour. What is society's cost of the 12 hours of military service?
(ii) What is the least possible cost to society of having 12 hours served per week?
(iii) What policy could the government use to obtain the required 12 hours of military service at the least possible cost to society?
State whether each of the following goods is nonrival, nonexcludable, or both:
a. a botanical garden b. a public beach c. a congested interstate highway d. a toll bridge e. street lights
Of the following, the best example of private information is when
A) Michael knows the price of a gallon of milk at the minimart but Michelle doesn't know. B) you know some of your used car's defects but a potential buyer cannot find out about them until after buying. C) you don't know the quality of a used car and must hire a trained mechanic who tells you all its defects. D) you pay the owner of a used car a little extra and she lets you know all of the car's defects.
Suppose the United States decides to go back on the gold standard. This should
A) improve the Federal Reserve's ability to target inflation. B) decrease the Federal Reserve's ability to pursue active monetary policy. C) increase the effectiveness of expansionary monetary policy. D) increase the effectiveness of contractionary monetary policy.