Suppose GDP is $5.0 trillion, resource extraction is $0.5 trillion, production is $1.5 trillion, and distribution is $1.0 trillion.
1. How big is GO?
2. How big is GO minus GDP?
Answer(s):
1. GO = 8 trillion
2. GO - GDP = 3 trillion
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Refer to Figure 5-16. Suppose Amit and Bree know each other's preferences so that it is not possible for one to deceive the other
Which of the following statements best describes the circumstances under which the optimal quantity of street lights could be achieved? A) The optimal quantity will be installed only if Bree pays for the entire installation cost. B) The optimal quantity will be installed only if the two parties agree to pay according to their willingness to pay as indicated by their respective demand curves. C) Because there are only two consumers, it is likely that private bargaining will result in the optimal quantity being installed. D) The optimal quantity will be installed only if the two parties split the cost of installation equally.
Critics of an equal distribution of income argue that the effect would be to reduce the incentive to be productive
a. True b. False Indicate whether the statement is true or false
When all players are choosing their best strategies on the assumption that their opponents are doing likewise, the outcome is called:
a. a Stackelberg equilibrium. b. a Nash equilibrium. c. a Cournot equilibrium. d. a Bertrand equilibrium.
Private entrepreneurs are likely to make better investment decisions than central planners because
A) entrepreneurs can often turn a project's failure into a request for additional funding to rectify the "problem". B) the failure of a government project reduces the personal wealth of the planners involved in the decision. C) entrepreneurs seek ever larger budgets, while planners are more focused on cost reductions and efficiency. D) investors who make mistakes must bear the costs of these mistakes personally.