If an allocation of resources is efficient, then
a. consumer surplus is maximized.
b. producer surplus is maximized.
c. all potential gains from trade among buyers are sellers are being realized.
d. the allocation achieves equality as well.
c
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Refer to Mexico and Japan. What is the cost of producing 1 bushel of food in Mexico?
a. 3 hours of labor.
b. 1/2 bolt of cloth.
c. 1/3 bushel of imported Japanese food.
d. 1/4 bolt of imported Japanese cloth.
If nominal wage rates increase by 5 percent per year and the price level increases by 3 percent per year, which of the following is correct?
a. Real wages will increase by 2 percent per year. b. Real wages will increase by 3 percent per year. c. Real wages will decrease by 3 percent per year. d. Real wages will decrease by 2 percent per year. e. Real wages will remain constant.
In the long run
A. a firm can vary all inputs, but it cannot change the mix of inputs it uses. B. a firm can shut down, but it cannot exit the industry. C. all firms must make economic profits. D. there are no fixed factors of production.
There are 1,000 families in a neighborhood that is affected by noise pollution from a local factory. The noise level is within legal limits, but could be reduced further if the company spent $5,000 on technological improvements. The company agrees to make these improvements if the affected families contribute the $5,000. A committee starts to collect donations to pay for the improvements. Which of the following is most likely to occur?
A. Because each individual contribution is so small and individuals will benefit from the reduction in noise whether they contribute or not, most people will not contribute and the firm will not make the improvements. B. Even if the families raise the $5,000, the firm will not reduce its noise pollution because it is within legal limits. C. The courts will force the firm to spend the $5,000 regardless of whether or not the families contribute the money. D. Because there are relatively few families involved and the individual contribution is so small, all families will voluntarily contribute.