We can measure total production by:
A. adding up what people spend on final goods and services.
B. adding up everyone's asset wealth.
C. comparing cost of inputs to final sale price.
D. adding up all spending in the economy on all goods and services.
A. adding up what people spend on final goods and services.
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Consider a game in which all outcomes give the players the same total payoff. Explain why every outcome in such a game will be Pareto optimal.
What will be an ideal response?
A vertical long-run aggregate supply curve indicates that
a. an increase in the price level will not expand an economy's output capacity in the long run. b. outputs greater than the long-run supply constraint cannot be achieved. c. an increase in the price level will permit the economy to achieve a higher level of output. d. an increase in the price level will promote technological change and more rapid economic growth.
In a market economy, government intervention
a. will always improve market outcomes. b. reduces efficiency in the presence of externalities. c. may improve market outcomes in the presence of externalities. d. is necessary to control individual greed.
Which of the following statements about markets is not true?
A. Markets have both a demand side and a supply side. B. Every market transaction involves an exchange of money for goods or resources or a direct exchange of goods or resources without money called barter. C. Markets necessarily have a physical location. D. The two types of markets include the factor and product markets.