Using Figure 2 below, suppose that the economy started at PAE2. A potential change that could cause the economy to go from PAE2 to PAE3 might be:
A. consumption spending increases.
B. investment decreases.
C. imports increase.
D. exports decrease.
A. consumption spending increases.
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A Pigovian tax is a tax:
A. meant to counter the effect of a negative externality. B. that increases efficiency in a market. C. that increases total surplus in a market. D. All of these statements are true.
For given inputs of labor and capital, if technology is more primitive, labor productivity will be
a. higher. b. lower. c. unchanged. d. characterized by increasing returns to scale.
Raising total utility is the prime objective of which political philosophy?
a. utilitarianism b. liberalism c. libertarianism d. None of the above is correct.
Figure 14.6 represents the market for health insurance. Suppose there are two types of consumers, low-cost consumers with $2,000 average medical expenses per year, and high-cost customers with $4,000 average medical expenses per year. The insurance companies estimate that 40% of its customers are high-cost type. The uninformed side(s) of the market is (are):
A. customers. B. insurance companies. C. both customers and insurance companies. D. neither customers nor insurance companies.