Each citizen in a small town suffers 5 units of irritation for each bushel of leaves burned in the town. The charge for hauling a bushel of leaves to the land fill is a fee equal to 20 units of irritation. There are 25 people in the town, each of whom minimizes personal irritation and has 10 bushels of leaves. If each person pursues their own self-interest, how much irritation will each person in the town experience from burning leaves each fall?
What will be an ideal response?
Since everyone burns all his or her leaves, the total irritation per person will be 25 × 10 × 5 = 1250.
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Anna's Antiques expects to get two bidders for the unique china teacup it sells. Each of the bidders can either have a high-value of $100 or a low-value of $70 with equal probability. If Anna receives $100 from the auction she can infer that
a. Both the bidders were high value bidders b. Both the bidders were low value bidders c. One of the bidders was high value, while the other was low value d. All of the above
The production possibilities frontier illustrates
a. the constant rate of technological progress. b. the fundamental concept of scarcity. c. the rapid growth of the U.S. economy. d. that guns always trade for butter.
The price elasticity of demand for a monopolist
A. increases as similar products enter the market. B. decreases as more competition occurs in the market. C. is infinite since the monopolist is the only firm in the market. D. is undefined due to the lack of competition.
Which of the following about fiscal policy is true?
a. Modern forecasting methods make it relatively easy to time fiscal policy changes in a manner that will help stabilize the economy. b. Legislative action is necessary if automatic stabilizers are going to smooth the ups and downs of the business cycle. c. Proper timing of changes in discretionary fiscal policy is both crucially important and difficult to achieve. d. Both the crowding-out and new classical theories indicate that expansionary fiscal policy will exert a powerful impact on aggregate demand.