This figure shows the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.If Sarah and Joe are working on a project together and faced with the choices outlined in the figure shown, we can predict the outcome will be that:
A. Joe will put forth low effort, and Sarah will put forth high effort.
B. both Joe and Sarah put forth low effort.
C. both Joe and Sarah put forth high effort.
D. Joe will put forth high effort, and Sarah will put forth low effort.
Answer: B
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A perfectly competitive steel mill that produces large amounts of pollution (a negative externality) will, from a social point of view,
a. produce too little steel. b. produce the socially optimal quantity of steel. c. produce too much steel. d. produce too much steel only if it installs pollution control equipment.
Which of the following terms is used to refer to the ability of people to exercise authority over the resources they own?
a. natural rights b. property rights c. input control d. collective control
It is easiest for new firms to enter a
A. Monopoly market. B. Duopoly market. C. Oligopoly market. D. Perfectly competitive market.
A technological advance in the production of MP3 players will cause the equilibrium selling price to increase.
Answer the following statement true (T) or false (F)