The government corrects for externalities in all of the following ways EXCEPT
A. regulation.
B. taxes.
C. subsidies.
D. lobbying.
Answer: D
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Credible promises and hostage mechanisms can support a continuous stream of cooperative exchanges except when
a. the promisor is better off fulfilling than ignoring his promise b. neither party has a prior dominant strategy c. the hostage can be revoked for just causes d. the hostage is more valuable than any given exchange e. the hostage is difficult to replace
Suppose Jerry consumes three hamburgers at McDonald's one evening. He figured the last one was just worth the price he paid for it. If the hamburgers he buys have a price of $1, then
a. he earned no consumer surplus b. he would have earned consumer surplus if he had eaten one more hamburger c. he was irrational d. he may have earned consumer surplus on the first two hamburgers e. he earned $1 consumer surplus on the third hamburger alone
Which agency was created by Congress in 1914 to investigate and regulate unfair methods of competition?
a. Department of Justice. b. Federal Trade Commission. c. Interstate Commerce Commission. d. General Accounting Office.
When the Defense Department ordered 132 new airplanes, the cost per plane was estimated to be $580 million. A cut in the order to 75 planes increased the per plane cost to $800 million. This change in per unit cost can be explained by:
A. A move to minimum efficient scale B. The law of diminishing returns C. The loss of economies of scale D. An increase in fixed cost