"Allocative efficiency in the production of cherries means that consumers can eat all of the cherries they desire." Is this statement true or false?
What will be an ideal response?
Allocative efficiency means that we are producing the goods and services society values most highly. It does not mean that consumers can afford all of the cherries that they desire. The allocatively efficient quantity of cherries is the level of production such that the marginal benefit of a pound of cherries equals the marginal cost of a pound of cherries. The marginal cost of any product will be positive, so the marginal cost of a pound of cherries at the allocatively efficient quantity will be positive. Hence for the allocatively efficient quantity of cherries, the marginal benefit of cherries also must be positive. In order for consumers to have all the cherries they desire, the marginal benefit of a pound of cherries must be zero. (If the marginal benefit is positive, consumers desire more cherries.) Therefore the allocatively efficient quantity of cherries is not the quantity at which consumers are able to eat all they desire.
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Countercyclical fiscal policy is viewed by most economists
a. as the perfect instrument for preventing boom and bust economies b. as a useful but imperfect instrument for reacting to boom and bust economies c. having no impact in the short run or long run. d. doing more damage than good in both the short run and long run. e. as having an impact only in the long run.
If 
j, an unbiased estimator of 
j, is consistent, then the:
A. distribution of 
j becomes more and more loosely distributed around 
j as the sample size grows.
B. distribution of 
j becomes more and more tightly distributed around 
j as the sample size grows.
C. distribution of 
j tends toward a standard normal distribution as the sample size grows.
D. distribution of 
j remains unaffected as the sample size grows.
M1 is considered ________ measure of money compared to M2.
A. just as legitimate a B. a more stable C. a more legitimate D. a less legitimate
Which of the following provides the best explanation of why low-income countries generally remain poor?
A. Their political environment and policies often discourage productive activity and reduce the potential gains from specialization and exchange. B. They are oppressed by developed nations that benefit from the cheap goods available from countries with low wage rates. C. They are poorly endowed with natural resources, which are essential for long-term rapid growth. D. When the average income level is low, workers have little incentive to earn higher incomes.