Both opponents of and proponents of government intervention most likely would agree with which of the following?
A. The market is inherently fair.
B. Property rights eliminate the need for government.
C. Property rights must exist for a market to operate.
D. Government can and does create proper incentives to correct for externalities.
Answer: C
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Historians are in general agreement that
(a) railroads opened the country and were built at great risk ahead of demand, gambling on the future. (b) railroads sharply cut down transportation costs, linking the country together in all directions and spurring the nation's growth far in advance of anything that might otherwise have been achieved. (c) railroads were the single innovation of the 19th century that created a great leap forward in terms of American economic growth. (d) none of the above are true.
In analyzing the operation of a firm, an economist assumes the firm wants to
A) maximize total sales. B) maximize total revenue. C) maximize total production. D) maximize total profits.
If firms are paying efficiency wages, they:
A. may be reluctant to increase nominal wages when aggregate demand increases. B. are highly vulnerable to import competition. C. may be targeted for takeover by firms paying market wages. D. may be reluctant to cut wages when aggregate demand declines.
According to Thomas Robert Malthus, the wage rate would be depressed to the subsistence level because of
A. the power of monopolies. B. the desire of capitalists to exploit the working class. C. the natural tendency of population to grow more rapidly than the production of food. D. the long-run downward trend in investment.