If two countries each are currently producing two goods, and each begins to specialize in the good in which it has a comparative advantage, what will happen to total (world) output?
A. It will increase.
B. It will decrease.
C. It will be unchanged in both countries.
D. It will rise in one country and fall in the other, but the total is unchanged.
E. Uncertain; economic theory has no answer to this question.
Answer: A
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In the above figure, if the market price is $100 per ton, then the firm's producer surplus on the second ton of wheat is
A) $25. B) $50. C) $75. D) $100.
A progressive income tax is one that
A) taxes income so that the average tax rate decreases with the level of income. B) taxes all income above the guaranteed minimum at an average rate that decreases with income. C) taxes income so that the average tax rate increases with the level of income. D) taxes income at a constant rate, regardless of the level of income.
The natural unemployment rate is ________ unemployment rates
A) the sum of the turnover and cyclical B) the sum of the turnover and mismatch C) the sum of the structural and cyclical D) the sum of the structural, cyclical, and frictional E) the cyclical minus the mismatch
Which of the following is false? a. The nature of public goods is such that the government cannot accurately assess the benefits of those affected. b. National defense and flood control are illustrations of public goods
c. Just as in the case of external costs, public goods tend to be underprovided by the private sector. d. All of the above are true.