The lack of capital in developing nations causes
A. the savings rate to be too high.
B. consumption rates to be too high.
C. output to be low in the present but high in the future.
D. labor productivity to remain low.
Answer: D
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The model of expectations in which the current level of inflation depends on past levels is referred to as:
A) realized real expectations. B) adaptive expectations. C) rational expectations. D) composite expectations.
John moved his office from a building he was renting downtown to the carriage house he owns in back of his house. How will his profit change?
a. Implicit costs fall. b. Explicit costs remain unchanged while implicit costs rise. c. Economic profit must fall. d. Explicit costs rise. e. Accounting profit will rise.
The product-variety externality is associated with the
a. producer surplus that accrues to incumbent firms in a monopolistically competitive industry. b. loss of consumer surplus from exposure to additional advertising. c. consumer surplus that is generated from the introduction of a new product. d. opportunity cost of firms exiting a monopolistically competitive industry.
Suppose two neighbors share a park. One neighbor, Al, leaves trash in the park. This bothers the other neighbor, Bert. According to Coase's theorem, the optimal level of trash in the park can be achieved if
A) Al is fined by the government. B) Al has the right to leave trash and Bert cannot do anything about it. C) Al has the right to leave trash and Bert can pay him to limit his dumping. D) Bert moves.