Economic growth is important because expansion in the output of goods and services
a. necessarily creates more jobs (more work for people).
b. makes it possible for individuals to consume more and achieve higher living standards.
c. leads to an increase in the general level of prices.
d. generates additional tax revenues for the government.
B
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Markets tend to overproduce goods that generate external costs.
Answer the following statement true (T) or false (F)
Mandy saved her allowance to buy a 12 pack of cream soda. When Mandy's brother saw the soda, he took four. Sodas were allocated between Mandy and her brother through
A) force. B) majority rule. C) first-come, first-served. D) sharing equally. E) personal characteristics.
The government proposes a tax on red roses in order to boost their tax revenue. Consumers will bear no part of the tax burden if the: a. demand for roses is perfectly inelastic. b. supply of roses is perfectly elastic
c. demand for roses is perfectly elastic. d. demand for roses is unit elastic.
Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The table below shows the monthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window. Quick Burger Operates aDrive-Through WindowQuick Burger Does NotOperate Drive-Through WindowQuick Burger$24,000$15,000The Sunshine Café$11,000$23,000Suppose Quick Burger has the legal right to operate a drive-through window, and Quick Burger and the Sunshine Café can negotiate with each other at no cost. Which of the following arrangements would lead to the socially optimal outcome?
A. The Sunshine Café pays Quick Burger $10,500 per month not to operate the drive-through window. B. Quick Burger pays The Sunshine Café $10,500 per month to operate the drive-through window. C. The Sunshine Café pays Quick Burger $12,500 per month not to operate the drive-through window. D. Quick Burger pays The Sunshine Café $12,500 per month to operate the drive-through window.