Nepalese villagers sell their kidneys as a way to earn much-needed money. Unfortunately, although the demand for such kidneys in developed economies is high and the medical facilities are available to conduct kidney transplants, the selling and buying of organs is illegal. What idea from Chapter 1 of the text does this situation best illustrate?
A. Marginal revenue should equal marginal cost.
B. Social and political forces sometimes rein in market forces.
C. Sunk costs do not matter in making decisions.
D. Microeconomics and macroeconomics are very much interrelated.
Answer: B
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Which of the following represents a problem with using per capita GDP to compare standard of living between less-developed and industrially advanced countries? a. GDP per capita does not take into account differences in population between countries
b. GDP is particularly difficult to measure in industrially advanced countries because a much larger percentage of economic activity occurs outside of officially measured market activity than in less-developed countries. c. GDP per capita will overstate the prevailing standard of living for the average person in countries with extreme levels of income inequality. d. None of the above are correct.
Which of the following is not true of the demand deposit multiplier?
a. Its formula is 1/RRR. b. It represents the change in demand deposits generated by a change in reserves. c. It represents the change in demand deposits generated by a change in taxes. d. It is a way to determine the effect on money supply from a given Federal Reserve action. e. It ignores changes in the behavior of the public and the banks.
Opportunity cost refers to how many inputs a producer requires to produce a good
a. True b. False Indicate whether the statement is true or false
When the money market is drawn with the value of money on the vertical axis, if the Fed sells bonds then
a. the money supply and the price level increase. b. the money supply and the price level decrease. c. the money supply increases and the price level decreases. d. the money supply increases and the price level increases.