The government often intervenes when private markets fail to provide an optimal level of certain goods and services. For example, the government imposes an excise tax on gasoline to account for the negative externality that drivers impose on one another. Why might the private market not reach the socially optimal level of traffic without the help of government?
It is possible that everyone can agree that the roads are too crowded, but no one is willing to make the sacrifice to stay home to help solve the congestion problem. The private incentive to fix the problem is small, so government policies such as tolls and gasoline taxes may improve social welfare.
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A Canadian oil company hires geological survey services from the United States. If all else remains equal, this will
A) increase the financial account. B) decrease the current account balance. C) increase the balance of trade. D) increase net exports.
Which is not a cause for business cycles considered by macroeconomists?
A) shocks to money supply B) greed C) shocks to technological ability D) variations in optimism
Motivation can be divided into two types:
a. Intrinsic and extrinsic b. Planned and non-planned c. Mysterious and obvious d. Achievement-oriented and open-ended
Refer to Figure 4.2. The income effect on the quantity of clothing purchased is:
A) the change from C1 to C3. B) the change from C1 to C2. C) the change from C2 to C3. D) the change from C3 to C2. E) none of the above