When choosing the right amount of a public good to supply, the government often:
A. provides too much, because people have an incentive to understate a good's value.
B. fails to provide it, because people have an incentive to understate a good's value.
C. provides too little, because people have an incentive to overstate a good's value.
D. guesses, because people have an incentive to overstate a good's value.
Answer: D
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Define the term deadweight loss. Will there be a deadweight loss if a good's marginal cost exceeds its marginal value? Explain.
What will be an ideal response?
Under Bretton Woods,
A) any foreign country cannot devalue its currency against the dollar in conditions of "fundamental disequilibrium." B) any foreign country could devalue its currency against the dollar in conditions of "fundamental disequilibrium," but the system's rules did not give the United States the option of devaluing against foreign currencies. C) any foreign country could devalue its currency against the dollar in conditions of "fundamental disequilibrium," and the system's rules did give the United States the same option of devaluing against foreign currencies. D) the U.S. could devalue its currency against the foreign currencies in conditions of "fundamental disequilibrium." E) any foreign country can revalue its currency against the dollar in conditions of "fundamental disequilibrium."
Private investment as a share of the economy tends to be higher in countries
a. with low levels of economic freedom. b. with high levels of economic freedom. c. with economic freedom ratings near zero. d. that have experienced a sharp reduction in economic freedom during the most recent decade.
A positional externality:
A. results in under investment in performance enhancement. B. arises in situations in which rewards depend on relative performance. C. only occurs in sports. D. arises in situations in which rewards depend on absolute performance.