If the marginal cost curve for paper production were altered to reflect the cost of the odor imposed on surrounding areas, which of the following would occur?
A. The market price, accounting for the externality, would rise.
B. The market price, accounting for the externality, would fall.
C. The marginal cost curve would shift downward.
D. It would become socially efficient to produce more paper.
Answer: A
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Other things remaining the same, which of the following is likely to happen if an industry introduces a labor-complementary technology in production?
A) There will be a rise in both the wage rate and the employment levels in the industry. B) There will be a fall in both the wage rate and the employment levels in the industry. C) There will be a fall in the wage rate and a rise in the employment levels in the industry. D) There will be a rise in the wage rate and a fall in the employment levels in the industry.
Can economic theory prove national restrictions on international trade will reduce global welfare?
A) No, but it can demonstrate that they will reduce the welfare of the nations that impose the restrictions. B) No, but it can demonstrate that they reduce efficiency. C) No, but it can predict which groups will be made worse off or better off. D) Yes, if welfare is defined as economic welfare.
If at the prevailing real wage rate, the quantity of labor supplied exceeds the quantity demanded
A) there is a shortage of labor. B) the real wage rate will rise to restore equilibrium. C) the real wage rate is greater than the equilibrium real wage rate. D) None of the above answers is correct.
Suppose a hurricane causes a great deal of destruction in Florida. After the hurricane, it takes much longer than usual for the reconstruction to take place. A possible explanation for this is
A) greed by suppliers of construction materials increased. B) government prevented price gouging during the reconstruction period. C) prices of construction materials fell in the Midwest. D) environmental restrictions on lumbering in the Pacific Northwest were relaxed.