What is the government's major problem involved in reaching the optimal level of provision for public goods?
What will be an ideal response?
To produce the optimal amount of each public good, the government must know everyone's preferences. Surveys about the willingness to pay may be biased if individuals have incentives to hide their true feelings.
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Labor productivity is $20 per hour and aggregate hours are 400 billion hours
a. What does real GDP equal? b. Because of technological advances, labor productivity doubles to $40 per hour. Furthermore, assume that aggregate hours decrease to 300 billion hours. What does real GDP equal?
Which of the following statements about excise taxes is TRUE?
A) The producer will increase the price of the good by the amount of the excise tax. B) The equilibrium price will increase and the equilibrium quantity will remain unchanged. C) Both the consumer and producer pay part of the excise tax. D) Consumers will refuse to pay excise taxes forcing the producers to pay it.
There are three goods you are interested in purchasing, X, Y, and Z. You notice that the price of Z has fallen. Given that the cross elasticity between Z and Y is –1.5 and the cross price elasticity between Y and X is 3.0, it would make sense that
a. Y and X are substitutes; X and Z are substitutes b. Z and X are complements; Y and X are substitutes c. Y and X are substitutes; Y is complementary to Z d. X and Z are unrelated; Y is complementary to X e. X and Z are complements; Y and Z are substitutes
According to the textbook application, GE was ordered to dredge the Hudson River
a. because it illegally dumped chemicals into the river b. even though its release of PCBs into that river was done legally c. under the rulings of RCRA d. none of the above