The poverty line is based on the percentage of people who cannot afford an adequate diet
a. True
b. False
Indicate whether the statement is true or false
False
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If a buyer's reservation value for a good is $15 and the price at which he purchases the good is $8, his consumer surplus is:
A) $7. B) $1.8. C) -$7. D) $120.
Buyers who were originally willing to buy 800 units of a good at $4 per unit are now willing to buy 1200 units at $4 per unit. That change would be described as: a. an increase in demand
b. a decrease in demand. c. an increase in quantity demanded. d. a decrease in quantity demanded.
A local restaurant offers an "all you can eat" barbeque special. You pay $9.00, and then you can eat as many servings as you desire at no additional cost. It would follow that you will stop eating when
a. your marginal utility (or value) derived from eating another serving is zero. b. your total utility (or value) derived from all of the servings consumed just equals $9.00. c. your marginal utility (or value) derived from another serving equals $9.00. d. it is physically impossible for you to eat any more.
Suppose the government imposes a per unit tax on an item whose production process creates a negative externality. Suppose the tax is exactly the value of the marginal externality cost. If the government now uses the tax revenue to clean up pollution from this process, the market will:
A. have internalized all costs and benefits. B. have used a command-and-control policy rather than a market-based policy. C. underproduce the good that is resulting in the negative externality. D. reduce the costs to the buyers and sellers of the good.