Consider a commonly owned fishery in a market with no other fisheries. Given the Tragedy of the Commons, it is more efficient to let a single firm take over the fishery even if that gives the firm monopoly power.
Answer the following statement true (T) or false (F)
False
Rationale: It might be more efficient, but it might not be. The Tragedy of the Commons tells us that there will be over-fishing (relative to the efficient level), while the monopoly model tells us that there will be under-fishing (relative to the efficient level). Which of these produces a greater deadweight loss depends on the specifics of the situation.
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If, after careful analysis, an economist concludes that there has been a market failure, which of the following possible corrective actions might the economist favor? Why? a. prohibiting the activity b. charging fees for continuing the activity c. requiring that the public be informed of the activity d. government purchase of the item for the public
What will be an ideal response?
A hospital receives a large donation and wants to use the funds to buy a new CT scanner. What is included in the opportunity cost of the new CT scanner?
a. There is no opportunity cost because the money was a gift. b. The foregone benefits of a new CT scanner if the funds are diverted to its purchase. c. The cost of the same CT scanner last year. d. The remaining depreciation expense on the CT scanner the hospital is replacing
If more and better technology is used for producing wheat in the United States than in a lesser-developed country, then the:
A. MRP of the U.S. workers will be higher than the MRP of the workers in the lesser-developed country. B. MRP of the U.S. workers will be lower than the MRP of the workers in the lesser-developed country. C. demand for the U.S. workers will be lower than the demand for the workers in the lesser developed country. D. price of wheat will be higher in the United States than in the lesser-developed country.
If the government wants to engage in fiscal policy to increase real GDP, it could...
What will be an ideal response?