A homeless family is given a government subsidy for an apartment in an affordable housing project. The apartment
A. is subject to the free-rider problem.
B. has widespread benefits and concentrated costs.
C. is not a public good.
D. is not subject to the principle of rival consumption.
Answer: C
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Consider two countries: a) In the first country there are 1,000 individuals; among them 500 earn $20,000 per month and the remaining 500 earn $400 per month
b) In the second country there are 1,000 people; among them 500 earn $12,000 per month and the remaining 500 people earn $600 per month. Which of the two countries has more inequality and which country is poorer of the two?
The figure above shows the market for umbrellas in Sunville. Suppose one firm owns all umbrella stores in Sunville and charges $40 per umbrella. In this situation, the market for umbrellas is
A) efficient, with no deadweight loss but also no surplus. B) inefficient, with a deadweight loss of $2,666.67. C) inefficient, with a deadweight loss of $1,333.33. D) efficient, generating a total surplus of more than $10,000.
Which of the following would cause aggregate demand to decrease?
A) The government increases taxes on both business and personal income. B) A drop in the foreign exchange value of the dollar C) The Fed increases the amount of money in circulation. D) Businesses and households believe that the economy is headed for good times, so they begin to feel increased security about their jobs.
The economy experiences both ________ and ________ when aggregate supply decreases and aggregate demand remains unchanged.
A. inflation; economic growth B. deflation; unemployment C. deflation; economic growth D. inflation; unemployment