What are transfer payments?
What will be an ideal response?
Transfer payments are payments by the government to people who do not supply goods or services in exchange.
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Figure 7-4
Following a rash of airplane bombs, the airlines have been forced to increase security at a cost of $30 million per year. The number of inspectors and machines does not vary with the number of passengers; the airlines must have sufficient staff available to handle the full-capacity load. Which graph in Figure 7-4 best illustrates the impact of the security expenditures?
A. 1 B. 2 C. 3 D. 4
Markets can efficiently handle irreversible decisions without involvement of government
a. True b. False Indicate whether the statement is true or false
Unemployment that results because the number of jobs available in some labor markets may be insufficient to give a job to everyone who wants one is called
a. the natural rate of unemployment. b. cyclical unemployment. c. structural unemployment. d. frictional unemployment.
Which of the following is a TRUE statement about monopoly and perfect competition?
A) Price is always higher and output higher under monopoly than under perfect competition. B) Because costs do not depend on market structure, price is usually higher and output is always lower under monopoly than perfect competition. C) If there are substantial economies of scale, price may be lower and output greater under monopoly than under perfect competition. D) If there are substantial economies of scale, price may be lower and output greater under monopoly than under perfect competition, and price may be below marginal cost instead of equal to marginal cost.