According to the possible trade-off example between warships and drinking water in the text, the policy question that should be considered in Malaysia is:
A. do the opportunity costs of the warships exceed their nominal costs?
B. do the nominal costs of the warships exceed their real costs?
C. do the benefits of the warships exceed their opportunity costs?
D. do the real costs of the warships exceed their nominal costs?
Answer: C
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The best example of an economic goal of a firm is
A) providing good products/services to its customers. B) improving its public image. C) increasing employee morale. D) increasing shareholder wealth.
Given an annual interest rate of 5 percent, what is the present value of receiving $2,000 in one year?
A) $1980.19 B) $1950.25 C) $1934.89 D) $1,904.76
The result that, under certain conditions, government intervention is unnecessary to fix a negative externality because it can be eliminated through bargaining between the affected people is called
A. the Coase Theorem. B. collective bargaining. C. a Nash equilibrium. D. social justice.
If a nation protects an industry because it believes that there are positive externalities in the production process, it is asserting that the free market will
A) produce less than is optimal from society's point of view. B) produce more than is optimal from society's point of view. C) produce the correct amount but charge too high a price. D) produce the correct amount but charge too low a price.