If the production of a product results in significant external costs, an appropriate government policy might be to
A) subsidize the production of the good.
B) tax producers and thus shift the supply curve to the left.
C) tax consumers' incomes and thus shift the demand curve to the left.
D) subsidize consumers since the good is being under-consumed.
B
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The construction of the interstate highway system in the United States is an example of a government policy to promote economic growth by:
A. improving technology. B. increasing human capital. C. increasing physical capital. D. improving the social and legal environment.
When economists say that policy A is more efficient than policy B, they mean policy A is better than policy B.
Answer the following statement true (T) or false (F)
Suppose your expenses for this term are as follows:
tuition: $5,000, room and board: $3,000, books and other educational supplies: $500. Further, during the term, you can only work part-time and earn $4,000 instead of your full-time salary of $10,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college? A) $5,500 B) $8,500 C) $11,500 D) $14,500
One of the major insights by economist John Maynard Keynes about production was that:
A. government spending needs to be kept in check in order for the economy to operate efficiently. B. household spending patterns don't really influence the health of the economy. C. firms may not produce all they can at a given price, but what they can sell. D. firms generally produce as much as they can at a given price.