Unless people can benefit from conservation, there is a temptation to:
A. delay resource extraction as long as possible.
B. extract and use resources at a constant rate.
C. extract and use resources as quickly as possible.
D. ban the extraction of nonrenewable resources.
Answer: C
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Consider an income tax and a head tax, the sizes of which have been set so that the government collects the same amount of money under each tax. Which tax does the consumer prefer?
a. The consumer is indifferent between the two taxes, since he pays the same amount of money under each tax.
b. The consumer prefers the head tax, because it does not lower the relative wage as does the income tax.
c. The consumer prefers the income tax, because it can be avoided by increasing the amount of leisure time consumed.
d. The consumer may prefer either tax, depending on whether the income tax increases or decreases the number of hours of work at the optimum.
In long-run equilibrium in a monopolistically competitive industry, a firm will
A) always earn an economic profit. B) produce an output rate at which P = MC. C) produce at a point to the left of the minimum point on its average total cost curve. D) have a perfectly elastic demand curve.
Productivity growth in the service sector
a. is notoriously difficult to measure. b. is comparable to productivity growth in agriculture. c. has been slow compared with productivity growth in manufacturing. d. Both a and b are correct. e. Both a and c are correct.
If the MPC were .5, what change in government spending (in billions of dollars) would be required to cause the equilibrium level of GDP to rise by 100?
A. An increase of 20. B. An increase of 50. C. An increase of 100. D. An increase of 200.