The tragedy of the commons refers to the:
A. overuse of resources that have no price.
B. failure of the Coase theorem when negotiation is costly.
C. under production of goods that have external benefits.
D. overuse of resources that have no cost.
Answer: A
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Entrepreneurs engage in
A) arbitrage. B) innovation. C) imitation of other successful entrepreneurs. D) all of the above.
What happens in the steady state to the capital—labor ratio, output per worker, and consumption per worker when each of the following events occur? You should assume that the steady-state capital—labor ratio is below the Golden Rule level
(a) Productivity falls. (b) Population growth falls. (c) The saving rate falls. (d) The depreciation rate falls.
Figure 9.4 represents the market for used 12 megapixel digital cameras. Suppose buyers are willing to pay $400 for a plum (high-quality) used digital camera and $200 for a lemon (low-quality) used digital camera. Initially buyers believe that 50% of used digital cameras in the market are lemons (low quality). Compared to the outcome with neutral expectations, how many fewer digital cameras are sold in equilibrium?
A. 90 B. 110 C. 140 D. The number of cameras sold in equilibrium is the same as the outcome with neutral expectations.
What is the total surplus of a market?
A. the sum of consumer surplus and producer deficit B. the sum of consumer surplus and producer surplus C. the difference between the consumer surplus and producer surplus D. the difference between the highest price that a consumer is willing to pay and the lowest price that a producer is willing to sell