A simple model used in your textbook to show how an economy works is the
a. renewable resources model
b. normative economic model
c. insatiable wants model
d. econometric model
e. circular flow model
E
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What is the biggest problem of using government actions such as taxes and pollution charges to control external costs?
A) insufficient legal power to enforce the controls B) obtaining enough data to determine how much the tax or pollution charge will be C) In some situations, there is no known way to control the external costs. D) political lobbying and voter disagreement E) The Coase theorem points out that taxes and pollution charges work only in the short run and not in the long run.
_____ is the practice of using extra resources to compete for obtaining monopoly, and leads to _____
a. X-inefficiency; a deadweight loss b. Rent seeking; a deadweight loss c. X-inefficiency; a loss in producer surplus d. Rent seeking; a loss in producer surplus
Which of the following statements best describes the study of economics?
A. Economics studies how people maximize returns in the stock market. B. Economics studies how the Federal Reserve handles fluctuation in business cycles. C. Economics studies how governments determine appropriate tax rates. D. Economics studies how individuals and groups manage scarce resources.
An industry with a Herfindahl-Hirschman index of 100 would have at least ______ firm(s).
Fill in the blank(s) with the appropriate word(s).