Superstars in sports or entertainment presumably would be willing to continue working in their specific areas for lower income than they are currently earning. This implies that
A) the large salaries serve no allocative function and only serve to make the superstars richer.
B) superstars are exploiting their fans by receiving such a large salary.
C) superstars do not respond to monetary incentives.
D) the high salaries are used to allocate their time but fail to bring in new sources of supply (other superstars) that are exactly like themselves.
Answer: D
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The main policy designer of the Federal Reserve system is the
A) 12 district banks. B) President and Congress. C) Federal Open Market Committee. D) Council of Economic Advisors.
A consumer goes to purchase a TV advertised for $300. As he is checking out, the clerk informs him of a $20 rebate offer for the TV, which he fills out and receives in 3 months. What can one can infer about the consumer's reservation price?
A. It was exactly $300. B. It was at least $300. C. It was at most $280. D. It was at least $280 but less than $300.
Your neighbor likes to blast 1970's rock music and the louder the better. The loud music imposes a cost on you because it disrupts your study of economics. Let D stand for the volume of his music in decibels, B for his benefits and C for your costs, where B and C are measured in dollars. For any given volume, D, your neighbor's benefit is B = 0.63D - 0.002D2 and your cost is C = 0.06D + 0.001D2. With an efficient Pigouvian tax, how much will your neighbor pay in noise taxes?
A. $22.50 B. $23.75 C. $28.75 D. $71.25
Which of the Ten Principles of Economics does welfare economics explain more fully?
a. The cost of something is what you give up to get it. b. Rational people think at the margin. c. Markets are usually a good way to organize economic activity. d. People respond to incentives.