Assume that Joe is willing to produce a hamburger for $1, and Mary is willing to pay $3 for a hamburger. Which of the following is true?
A. Joe and Mary cannot make a mutually beneficial exchange.
B. Joe and Mary will only trade if the equilibrium price is less than $1.
C. Joe and Mary can make a mutually beneficial exchange.
D. Joe and Mary will not trade in equilibrium.
Answer: C
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In the United States since 1960, the price of health care services has increased but the price of health insurance has decreased
Indicate whether the statement is true or false
The introduction of no-load stock and bond mutual funds has made investing in stocks and bonds increasingly attractive to even the small investor. If, as a result, a large amount of money were shifted from money-market deposit funds to these stock and bond funds, how would the M1 and M2 money supply figures be affected?
a. The M2 money supply would decline; M1 would be unaffected. b. The M2 money supply would increase; M1 would be unaffected. c. The M2 money supply would increase; M1 would decline. d. Both the M1 and M2 money supply figures would increase.
During the last four decades, defense expenditures have
a. accounted for approximately one-half of federal expenditures. b. accounted for less than 10 percent of federal expenditures. c. been increasing as a share of federal expenditures. d. been declining as a share of federal expenditures.
Which of the following suggests that private markets can be effective in dealing with externalities?
a. the "invisible hand" b. the law of diminishing social returns c. the Coase theorem d. technology policy