Many service-sector jobs in the United States have moved to other countries where these jobs are done at a fraction of the cost. The outsourcing of jobs overseas is heavily debated by politicians, policy makers, and economists in the United States
Based on your understanding of trade and the benefits and losses from trade, how do you think outsourcing affects social surplus in the domestic economy?
Companies that outsource work to other countries will see a fall in their input costs. The prices of these goods and services will fall, increasing consumer surplus in the market. On the other hand, some workers who are employed in the service sector in the domestic economy will lose their jobs. Outsourcing will benefit the economy as a whole if the gain in consumer surplus outweighs the possible losses in the job market (assuming that the workers do not find other comparable jobs). Outsourcing is hotly debated for this reason: it affects different groups in the economy in different ways.
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Player 1 and Player 2 are playing a game in which Player 1 has the first move at A in the decision tree shown below. Once Player 1 has chosen either Up or Down, Player 2, who can see what Player 1 has chosen, must choose Up or Down at B or C. Both players know the payoffs at the end of each branch. 
If Player 2 could make a credible commitment to choose either Up or Down when his or her turn came, then what would Player 2 do?
A. Player 2 would commit to choosing Down. B. Player 2 would commit to choosing Up. C. Player 2 would not commit to choosing either strategy. D. Player 2 would commit to mimicking Player 1's strategy.
According to real business cycle theorists, in modern times, economic fluctuations can largely be attributed to
A) the entry of more college graduates in the labor market. B) advancements in technology. C) large scale unemployment. D) immigration policies that increased the supply of labor.
Which one of the following decisions most clearly reflects a lack of understanding of the concept of sunk costs?
a. You pay to have your car towed back to the repair shop because it was not fixed properly the first time. b. You decide to get a master's degree because you cannot find a job in the field in which you majored. c. You decide to purchase a piece of machinery for your business that will eliminate three employees' positions. d. You study eight hours for a final exam even though there is no way now that you can pass the course.
Assume the tennis ball industry, a perfectly competitive industry, is in long-run equilibrium with a market price of $5. If the demand for tennis balls increases and the industry experiences decreasing returns to scale, long-run equilibrium will be reestablished at a price
A. greater than $5. B. equal to $5. C. less than $5. D. either greater than or less than $5, depending on the number of firms that enter the industry.