The statement "Gross domestic product (GDP) values all output equally" means that:
a. household production is treated the same as production by firms
b. depreciation of manufactured capital is treated the same as depletion of natural resources.
c. the purchase of pollution control equipment is valued the same as pollution itself.
d. leisure time is valued the same as time spent working a job.
e. the market price of output is the measure of that output's value.
Answer: e. the market price of output is the measure of that output's value.
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Economies of scale in nuclear power plants exist because of
A) more efficient plant management. B) a better understanding of the plant's idiosyncrasies, or learning-by-doing. C) nuclear power technology changes. D) both A and B.
If a short-run fixed cost is sunk, then
A) losses can be minimized by shutting down. B) the firm should keep producing to cover the sunk cost. C) the cost cannot be avoided by shutting down. D) Both B and C.
The president is told that an inflationary gap must be closed but that consumers are increasing their spending on consumption and producers increasing their demand for investment goods. If the gap is to be closed, the President must
a. rely on reducing the price level b. resort to creating a deficit budget c. increase aggregate demand d. rely on increasing the price level e. resort to creating a surplus budget
The assessment by George Stigler concerning the tradeoffs between "market failure" and "political failure" in the American economy provides support for which of the following solutions to the problems of monopolies?
a. public ownership of monopolies b. government regulation of monopolies c. government incentives to promote competition in monopolized industries d. doing nothing at all