Which of the following is a definition of Tobin’s q?
a) the growth rate of the quantity of money
b) a firm’s optimal capital stock divided by its actual capital stock
c) the ratio of a firm’s stock market valuation to the value of its physical assets
d) the ratio: gross investment/net investment
e) the rate at which physical capital depreciates, plus the interest rate
c) the ratio of a firm’s stock market valuation to the value of its physical assets
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An example of the quality change bias, and not a new goods bias, in the calculation of the CPI is a price increase in
A) Coke versus Pepsi. B) DVDs purchased on Craigslist, an online classified website. C) a 2013 GPS unit versus a 2008 GPS unit. D) etexts versus used books . E) pants purchased by a first-time shopper at Aeropostale.
Refer to Figure 5-10. What is the value of the net gain to society as a result of subsidizing chicken pox vaccinations?
A) value equal to the area of FEG B) (PE × QE) C) value equal to the area of QFFGQE D) (PF × QF)
In which of the following situations would a positive externality most likely be involved?
A. Shawn is sitting at home one day when she gets a telephone call, informing her that she has won $10,000 in a contest she entered three months ago. B. There are eight houses in the neighborhood where Rodney lives. Rodney likes nice-looking yards, and last week his neighbors began to beautify their yards. C. Willy needs eight hours of sleep each night to feel good. Last night he got eight hours of sleep. D. Patrick received an A on a biology exam. He is feeling better about his chances of getting admitted to medical school.
Explain why the social demand curve for a public good is the vertical sum of the demand curves of each individual
What will be an ideal response?