If New York City expects that an increase in bus fares will raise mass transit revenues, it must think that the demand for bus travel is:
A. elastic.
B. unit elastic.
C. inelastic.
D. perfectly inelastic.
Answer: C
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Suppose voter preferences over a public good funded through a proportional income tax are single peaked. If everyone has the same tastes and the public good is a normal good, then ideal points for higher income individuals will lie to the right of ideal points of lower income individuals.
Answer the following statement true (T) or false (F)
High-skilled workers earn more than low-skilled workers in part because
A) high-skilled workers have higher value of marginal products. B) of government legislation. C) the supply of high-skilled workers is more elastic. D) the demand for high-skilled workers is more elastic.
The incentive for managers of a government-operated firm (for example, a state university or the U.S. Post Office) to operate efficiently will be
a. low because all government workers are lazy. b. low because there are no residual claimants to monitor and institute cost-reducing measures. c. high because government employees and officials will be less concerned with personal gain. d. high because voters can easily detect those who are to blame for inefficiencies and replace them.
Which of the following fundamental resources is the basis of labor?
a. Capital b. Natural resources c. Time d. Profit e. Entrepreneurial ability