From the economist's perspective, "market failures" basically arise when:
A. the market system is unable to adapt to or to accommodate change.
B. the quantity demanded for a good or service is greater than the quantity supplied of the good or service.
C. demand and supply do not accurately reflect all the benefits and all the costs of production.
D. the quantity supplied of a good or service is greater than the quantity demanded for a good or service.
Answer: C
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Outsourcing is being practiced by
A) U.S. firms that want to keep jobs at home in the United States. B) overseas firms hiring in the U.S. labor market and by U.S. firms hiring in foreign labor markets with lower wages. C) U.S. firms only. D) governments but private firms are not allowed to outsource work.
A nation's trade deficit will expand when its:
a. currency appreciates. b. economy is shrinking. c. investment environment is less attractive to foreigners. d. all of these are true.
One possible solution to an incentive problem arising under unobservable actions is:
A. to be the boss and fire the inefficient worker and send a signal to others. B. to pay more and make the worker efficient. C. to sell the agent the right to the total production. D. to buy the agent's right to his total output.
You want to buy a TV that regularly costs $250. You can either buy the TV from a nearby store or from a store that's downtown. Relative to going to the nearby store, driving downtown involves additional time and gas. The downtown store, however, has a 10 percent off sale this week. Last week you drove downtown to save $20 on some concert tickets, a 15 percent savings. Should you drive downtown to buy the TV?
A. No, because you will save more than $20. B. Yes, because you will save more than $20. C. No, because you will only save 10 percent, which is less than 15 percent. D. Yes, because you will save 10 percent, which is better than nothing.