Explain Say’s law.
What will be an ideal response?
Say’s law, attributed to the 19th-century French economist, is that “supply creates its own demand.” Essentially, this theory states that people engage in production in order to be able to buy or demand other things. Whatever one earns from production, one expects to spend on goods and services of equivalent value. Thus, supply (production) has created its own demand.
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A public highway looks like a collective consumption good because there is very little traffic on it and zero congestion. Hence the marginal cost of an additional car is zero
Which of the following statements best describes why we should not assume that the road would always be a collective consumption good? a. The lack of congestion could be the result of government overproduction. b. The lack of congestion could be because of its low speed limit. c. The lack of congestion could be because of excessive police ticketing. d. The lack of congestion is because of the lower cost of alternative means of travel.
In the long run, fixed costs are
A) sunk. B) avoidable. C) larger than in the short run. D) not included in production decisions.
Compared to 1968, in 2008 income distribution would be considered
A. much more equal. B. somewhat more equal. C. about as equal. D. Much less equal.
In contrast to the structural deficit, the cyclical deficit reflects
A. Changes in discretionary fiscal policy. B. Fluctuations in economic activity. C. Fiscal policy decisions. D. Changes in the "full-employment" deficit.