Suppose your community is considering using public money to build a new sports stadium for the team that is already in the community but is likely to leave without a new stadium. Suppose you are watching a news broadcast in which the supporters are saying that it will enhance economic activity because of the increase in restaurant activity that will occur around the new stadium. Now suppose you hear that an independent economist is going to appear during the next segment. It is likely she will say
A. there will be no new economic activity created.
B. it may be a short-term cost, but in the long term, it will be worthwhile.
C. the economic activity created in the area will make it worth the investment.
D. there will be no new economic activity created in net because the same amount of money will be spent in the city whether or not there is a team. It will simply substitute from the game to something else.
Answer: D
You might also like to view...
Job rationing occurs if
A) the Lucas wedge is positive. B) the minimum wage is set below the equilibrium wage rate. C) an efficiency wage is set below the equilibrium wage rate. D) the real wage rate is pushed above the equilibrium wage rate. E) a union wage is set below the equilibrium wage rate.
Which of the following is not a characteristic of a prisoner's dilemma game?
A) Defecting is a dominant strategy for each player. B) Each player has two strategies: cooperate or defect. C) There is a single Nash equilibrium. D) The Nash equilibrium is the best outcome for each individual and for the grou
The United Company competes with many other firms each producing slightly different products. Firms freely enter and exit this industry. The type of industry United Company operates in is
A) a monopoly. B) monopolistic competition. C) oligopoly. D) perfect competition. E) oligopolistic monopoly.
If there are both external benefits and external costs associated with the production and consumption of a good, and the external benefits are greater than the external costs,
a. Taxing it could bring us closer to the efficient solution b. Subsidizing it could bring us closer to the efficient solution c. Neither a tax or a subsidy could bring us closer to the efficient solution d. None of the above is true.