Describe the alternative methods of allocating scarce resources
What will be an ideal response?
Resources can be allocated using:
• Market price: People who are willing and able to pay the price get the resource.
• Command: Someone in command decides who gets the resource.
• Majority rule: The majority vote decides how resources are allocated.
• Contest: Winners receive the resource.
• First-come, first-served: People first in line get the resource.
• Lottery: Randomly selected winners receive the resource.
• Personal characteristics: People with the "right" characteristics get the resource.
• Force: The stronger person or group gets the resource.
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The random effects approach _____.
A. cannot be used if the key explanatory variable is constant over time B. is preferred to pooled OLS because RE is generally more efficient C. is suitable if the Hausman test rejects the assumption that the unobserved effect is uncorrelated with the explanatory variables D. is more convincing than fixed effects for policy analysis using aggregate data
A good with a price elasticity of demand equal to .75 is described as price-inelastic.
Answer the following statement true (T) or false (F)
The following statements about the "sunk cost fallacy" are true, except:
A. It's the tendency to drag past costs into current marginal cost-benefit calculations B. It comes from a desire to "get one's money's worth" out of a past expenditure C. It refers to the fact that average fixed costs are not a major part of production costs D. It could lead one to "throw good money after bad"
Trade, as a percentage of GDP, has
A. decreased over the last 50 years. B. increased from 1960 to 1980 but has been steady since. C. remained constant for the last 50 years. D. increased over the last 50 years.