What are the conditions necessary to produce neither an “under allocation” nor “over allocation” of resources?
Please provide the best answer for the statement.
To achieve the proper allocation of resources, the marginal benefit of producing a good must equal the marginal cost of producing the good. If the MB is greater than the MC, society could gain in utility by producing more of the good. If MC is greater than MB, society could gain in utility by producing less of the good. Thus, utility is maximized when MB = MC.
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Imagine a crude banking system based on a reserve of 100 gold coins, with circulating paper deposit claims on 500 gold coins
This situation is sustainable if, among other things, merchants ________ accept paper claims on gold as payment for their goods, and gold coins withdrawn from the banking system are ________ the system. A) will, returned to B) will, kept out of C) will not, returned to D) will not, kept out of
A major point of the Baumol-Tobin model of the transactions demand for money is that they show that the
A) demand for money is related to income. B) velocity of money is constant. C) fraction of income that people wish to hold in the form of money is constant. D) interest sensitivity of the demand for money is based on a transactions motive shared by most people.
Long-run economies of scale exist when the long-run average cost curve:
a. rises. b. remains constant. c. falls. d. does not exist.
John Smith is a typical citizen. Economic theory suggests that he is likely to make a more informed choice when he buys a personal computer than when he votes for a congressional candidate. This view is
a. false because the actions of legislators will exert a greater impact on Smith's welfare than will the purchase of the computer. b. false; Smith will tend to choose more carefully when he makes public choices than when he makes private choices. c. uncertain; it would be true if, and only if, Smith's spending on personal computers exceeds his tax bill. d. true; since Smith can decide what computer to buy, but his individual vote is very unlikely to decide the outcome of a congressional election, he has more incentive to inform himself about the computer than the congressional election.