Which of the following statements is false?
A. Critics feel that wage and price controls interfere with the price mechanism.
B. Sweden has one of the world's most equal distributions of income, but also has a relatively low standard of living.
C. In the former Soviet Union, most of the crops were produced on collective farms.
D. The price system is based on supply and demand.
B. Sweden has one of the world's most equal distributions of income, but also has a relatively low standard of living.
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Mary and Cathy are roommates. Mary assigns a $30 value to smoking cigarettes. Cathy values smoke-free air at $15 . Which of the following scenarios is a successful example of the Coase theorem?
a. Cathy offers Mary $20 not to smoke. Mary accepts and does not smoke. b. Mary pays Cathy $16 so that Mary can smoke. c. Mary pays Cathy $14 so that Mary can smoke. d. Cathy offers Mary $15 not to smoke. Mary accepts and does not smoke.
When external or spillover benefits occur in the production of a particular product, the private market tends to provide:
A. too much of the product. B. the socially optimal amount of the product. C. too little of the product. D. none of the product.
The neutrality of money is the idea that:
A. virtual money has a neutral effect in the economy. B. hard money has a neutral effect in the economy. C. aggregate price levels do not affect real outcomes in the economy. D. in real terms, it makes no difference who is spending each dollar.
Consider the diagram below, where E is the consumer's original equilibrium position. We know good X is not a normal good if, as income increases, the consumer's new equilibrium position is at point:
A. A
B. B
C. C
D. D