Figure 15.3 depicts a one-mile stretch of beach with 100 swimmers distributed evenly along the beach. There are two ice cream vendors - 1 and 2 - on the beach selling an identical product. Assume that each swimmer buys only one ice cream cone and that they prefer to buy ice cream from the nearer vendor. If vendor 1 is at B while vendor 2 is at D, vendor 1 has an incentive to move:
A. to the left of its current location.
B. toward the median location.
C. to the right of vendor 2's location.
D. None of these
Answer: B
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Special interest legislation generally leads to an increase in social welfare
a. True b. False
Complements
What will be an ideal response?
Suppose that last week 100,000 people lost their jobs or quit. We can say that
A. the number of unemployed increased by less than 100,000 people because we should not count those who quit their jobs. B. the number of unemployed increased by 100,000 people. C. the 100,000 people represent a stock known as the new unemployed. D. the 100,000 people represent a flow known as job departures.
During the financial crisis of 2007-2009 in the United States it was revealed that the function of a lender of last resort had not kept pace with the evolving financial system because:
A. banks had become sufficiently diversified so as to be able to provide for their own liquidity. B. banks were sufficiently linked to one another that the need for a lender of last resort had diminished. C. shadow banks lacked access to the financial resources available through the lender of last resort. D. financial intermediaries had grown sufficiently large so as not to need a lender of last resort.