Refer to the information provided in Figure 16.4 below to answer the question(s) that follow.Los Angeles International Airport (LAX) is located next to Playa Del Rey. The noise from air traffic negatively affects individuals living in Playa Del Rey, however, this cost is not considered by airlines or air travelers. The airlines feel they have a right to use the airspace while the individuals living in Playa Del Rey feel they have the right to quiet. The following diagram depicts the marginal costs and marginal benefits associated with air travel.
Figure 16.4Refer to Figure 16.4. Suppose the government assigns property rights to the residents of Playa Del
Rey. No negotiations occur between the parties. The resulting level of air travel is
A. 0 units.
B. 100 units.
C. 120 units.
D. indeterminate from the given information.
Answer: A
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In laboratory experiments, researchers have found that the behavior of Proposers and Responders in the ultimatum game is consistent with people:
A. acting in their own narrow self-interest. B. valuing fairness. C. not understanding the game. D. behaving irrationally.
Why is it important to use real GDP rather than nominal GDP figures when making comparisons of output across time periods?
A. The real GDP figures are a better measure of changes in the general level of prices. B. The real figures will reflect changes in the quantity of output and not changes in the general level of prices. C. The real figures will reflect changes in the general level of prices as well as changes in the quantity of output. D. The real GDP figures adjust for changes in the level of employment.
The purpose of the IMF is to:
A. provide developing countries with short-term loans and technical assistance. B. determine monetary and fiscal policy in developing countries. C. determine exchange rates for developing countries. D. buy and sell the currencies of developing countries in order to stabilize their value.
Good governance is:
A. not important to either economic growth or development. B. important to economic growth, but not to economic development. C. important to economic development, but not to economic growth. D. important to both economic growth and development.