The primary determinant of patterns of interregional trade is
A) accidents of history.
B) resource allocations.
C) factor abundance.
D) weather.
E) centralized optimization.
A
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Which of the following statements is true?
A) Positive economics describes what people ought to do. B) Normative economics describes what people actually do. C) Positive economics generates objective descriptions that can be verified with data. D) Normative economics is free from value judgments, tastes, and preferences of economic agents.
In a long-run equilibrium, the marginal firm has
a. price equal to average total cost. b. total revenue equal to total cost. c. economic profit equal to zero. d. All of the above are correct.
Suppose Erie Textiles can dispose of its waste "for free" by dumping it into a nearby river. While the firm benefits from dumping waste into the river, the waste reduces fish and bird reproduction. This causes damage to local fishermen and bird watchers. At a cost, Erie Textiles can filter out the toxins, in which case local fishermen and bird watchers will not suffer any damage. The relevant gains and losses (in thousands of dollars) for the three parties are listed below. WithFilterWithoutFilterGains to Erie$200$400Fisherman$180$50Bird Watchers$130$25If all three parties can communicate and negotiate with each other at no cost, will Erie Textiles use a filter?
A. No, because it makes $200 less in profit with the filter. B. Yes, because the benefit it would receive from being able to advertise that it acts in an environmentally responsible way exceeds the cost of using a filter. C. Yes, because fishermen and bird watchers are willing to pay enough to Erie Textiles to offset the cost of using a filter. D. No, because use of a filter would result in smaller total economic surplus.
What is government failure, and how would it be demonstrated on a production possibilities curve?
What will be an ideal response?