According to supply-side theory, if one starts from a balanced budget, a cut in taxes will tend to cause ________
A) a budget deficit
B) no change in the federal government budget
C) a decrease in aggregate supply and an increase in aggregate demand
D) a budget surplus
D
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The law of comparative advantage implies that a doctor who is also a talented auto mechanic should
A. get a part-time job at a gas station. B. do his or her own auto repairs and those of his or her neighbors. C. hire a professional mechanic to repair his or her car. D. only repair the cars of other doctors.
There is a bias in the political process against free trade because
A) those who lose from free trade are better organized than those who gain. B) the gains from free trade cannot be measured. C) those who gain from free trade can't compensate those who lose. D) foreign governments make large donations to U.S. political campaigns. E) there is a high correlation between the volume of imports and the unemployment rate.
The demand for Godiva mint chocolates is likely quite elastic because
a. there are many close substitutes. b. this particular type of chocolate is viewed as a luxury by many chocolate lovers. c. the market is narrowly defined. d. All of the above are correct.
Long lines
a. and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. b. and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. c. are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. d. are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time.