An economist has estimated that the maintenance of a public park costs $25,000 a year and that the public park generates $30,000 a year in revenue for merchants near the park. From society's point of view, the maintenance of this park is
A. inefficient because everyone in the community pays taxes to support the park, but only the merchants near the park benefit.
B. potentially efficient because no one would be made worse off as a result of maintaining the park.
C. potentially efficient because the value of the gains exceed the value of the costs.
D. inefficient because the additional revenues generated by the park are so low.
Answer: C
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If the quantity of real GDP supplied equals the quantity of real GDP demanded, then
A) nominal GDP must equal real GDP. B) real GDP must equal potential GDP. C) real GDP must be greater than potential GDP. D) real GDP might be greater than, equal to, or less than potential GDP. E) real GDP must be less than potential GDP.
Refer to the figure above. What is the deadweight loss of the tariff imposed by the government?
A) $10 B) $20 C) $30 D) $40
The marginal rate of transformation of y for x represents
A) the slope of the budget constraint. B) the rate at which the consumer must give up y to get one more x. C) -Px/Py. D) All of the above.
Which of the following is a practical question to implementing Keynesian economic policies to stimulate the economy?
a. Does the government know whether it is better to increase spending or increase taxes? b. Does the government know whether it is better to cut spending or cut taxes? c. Does the government know when there is cyclical unemployment? d. Does the government accurately know what the country’s potential GDP is?