A capital shortage results from insufficient capital to meet our national "needs."
A. True
B. False
C. Uncertain
A. True
You might also like to view...
The capture theory of regulation predicts that
A) regulation helps producers to maximize profits. B) regulators capture the firm's economic profit and transfer it to consumers as consumer surplus. C) regulators eliminate the deadweight loss a monopoly can create. D) resources are used efficiently. E) regulators capture the firm's economic profit and transfer it to themselves.
Many economists criticize protectionism because it causes losses to consumers and eliminates jobs in domestic industries that use protected products. Why, then, do some people support protectionism?
A) Supporters of protectionism in high-income countries believe that wages will fall as a result of competition with firms from developing countries. B) Supporters of protectionism believe that free trade will lead to inflation. C) The criticisms of economists are based on theory. In fact, protectionism increases consumer and producer surplus as well as employment. D) Supporters of protectionism believe free trade will cause their countries to lose their comparative advantage.
Consider a consumer with preferences for consumption of a composite good (C) and leisure (L) given by the following utility function:
U(C,L) = 2C1/2 + L Denote the consumer's wage rate by w and total time available for labor and leisure is normalized to one. The price of consumption is one. Denote the amount of labor supplied as N, so that N + L = 1. The consumer also earns non-labor income ("allowance") of 0. a. Write out the budget constraint determining feasible allocations of leisure and consumption. b. Compute the optimal bundle of leisure and optimal bundle of consumption. c. Derive the consumer's labor supply function: N*(w, ). d. Determine the effect of increasing non-labor income on the supply of labor (that is, compute the relevant partial derivative). e. How does non-labor income affect the consumption of the composite good, C? f. Compute the effects of an increase in wage on consumption and labor supply. Is leisure a normal good?
If global pollution causes climatic changes that permanently harm crop production worldwide, aggregate supply and demand analysis would lead us to expect: a. an increase in the price level
b. a decrease in the price level. c. rightward shifts of the aggregate demand and aggregate supply curves. d. a leftward shift of the aggregate demand curve. e. an increase in the potential level of real GDP.