When a society achieves allocative efficiency, it
A) is not achieving production efficiency.
B) is producing that combination of goods and services that society values most highly.
C) might or it might not be producing at a point on society's PPF.
D) is producing a combination of goods and services whose marginal cost exceeds their marginal benefit.
E) is producing the combination of goods and services for which marginal benefit exceeds marginal cost by as much as possible.
B
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Crowding out is a reduction in private investment caused by government budget deficits, and may partially offset the expansionary effects of fiscal policy. The exact degree of crowding out depends on all of the following except
A) how much of the deficit is financed by households, firms, and governments outside of the United States. B) how much real interest rates increase. C) the level of the marginal corporate income tax rate. D) the sensitivity of investment to the real interest rate.
When deciding what to use as money, one characteristic to look for is the:
A. stability of value. B. shape. C. intrinsic value. D. exchange value
A prisoner's dilemma illustrates situations in which:
A. there is a conflict between the narrow self-interest of individuals and the broader interests of a group. B. efficiency is an important social goal. C. resources with the lowest opportunity cost should be used first. D. everyone does best when each person specializes in the activities in which he or she has a comparative advantage.
In the above figure for a monopolistically competitive firm, the profit-maximizing output and price are respectively
A. 50 units and $8. B. 80 units and $11. C. 60 units and $9. D. 60 units and $14.