If revenue from a gasoline tax is used to build and maintain public roads, the gasoline tax may be justified on the basis of
a. the benefits principle.
b. the ability-to-pay principle.
c. vertical equity.
d. horizontal equity.
a
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Tourism requires the actual movement of currency notes while investment in international bank deposits does not
a. True b. False Indicate whether the statement is true or false
Adam Smith in The Wealth of Nations argued that
A. the social order needs the guidance of the government's visible hand. B. society works best when people act in their own interest. C. society works best when people act unselfishly. D. society works best when people act as if they were invisible to others.
Firms with market power may try to limit entry of rival firms in the long run by setting the price of their product below the level that maximizes profit. This kind of pricing behavior
A. is OK in theory but would not be commonly practiced in the real world because no manager will ever price either above or below the profit-maximizing level. B. is a strategic pricing decision because the manager is making the pricing decision with the goal of altering the behavior of rival firms to protect its profit in the long run. C. is a business practice or tactic because pricing decisions are routine decisions made by managers every day. D. should always be implemented in order maximize the firm's market share in both the short run and long run periods.
Most economists believe that there are positive externalities in education. One can conclude that a free market would fail to give the socially optimal outcome because the equilibrium:
A. price and quantity would be too high. B. price would be too low and quantity would be too high. C. price and quantity would be too low. D. price would be too high and quantity would be too low.