Which of the following statements is true?
A. Government cannot remove individuals from a prisoner's dilemma setting and make them better off.
B. As long as government charges each individual a tax that is more than the gain received by being removed from a prisoner's dilemma setting, then government makes that individual better off.
C. Government can remove individuals from a prisoner's dilemma setting by changing the payoff matrix.
D. a and c
E. all of the above
Answer: C
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In a world of perfect certainty, sharecropping would be less efficient than a farm owner working his own farm because
(a) sharecroppers receive only half of their marginal product. (b) paying a worker a wage gives him or her an incentive to shirk. (c) sharecroppers are exploited by landlords. (d) renting farmland concentrates risk on the renters. (e) all of the above.
Which of the following is a strength of a command-based economic system?
a. It is possible for goods to be allocated based on need rather than based on willingness and ability to pay. b. Since price is freely set based on supply and demand, there are few shortages or surpluses. c. Consumers can transmit their preference for product quality and variety by way of their "dollar votes" cast in the marketplace. d. Producers have strong incentives to innovate because successful innovators are rewarded with higher profit.
What is the measure of responsiveness of quantity demanded of a product to a change in its price? Why is it a negative number for a typical good? With the help of suitable diagrams, explain the difference between elastic and inelastic demand.
What will be an ideal response?
Which of the following is an example of roundabout production?
a. A farmer switches from growing soybeans to growing wheat, getting fewer crops per year as a result. b. A farmer switches from growing soybeans to growing wheat, getting more crops per year as a result. c. A self-employed dressmaker becomes a wage worker at a factory that makes dresses. d. A coal mine is sold by its owners to its workers and run as a cooperative. e. A telemarketing firm declares a holiday for two days while a new phone system is installed.