Classify each of the following goods on the basis of the characteristics of excludability and rivalry in consumption giving appropriate reasons: a) A lighthouse b) A pair of shoes c) A paid Web site d) A congested non-toll road
What will be an ideal response?
a) A lighthouse is non-excludable in consumption because nobody can be prevented from using it. It is also non-rival in consumption because its use by one person will not reduce the quantity available to others.
b) A pair of shoes is excludable in consumption because anybody who does not pay for it can be prevented from using it. It is also rival in consumption because it can be used by only one person at a time.
c) A paid Web site is excludable but non-rival in consumption because anybody who does not pay for its use can be prevented from using it but its use by one person will not restrict its use by others.
d) A congested road is non-excludable but rival in consumption because even though nobody can be excluded from its use, its use by one individual will reduce the space available for others.
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Describe Keynesian Economics as it pertains to GDP
What would be an ideal response?
Refer to Table 25-2. Suppose a transaction changes a bank's balance sheet as indicated in the following T-account, and the required reserve ratio is 10 percent. As a result of the transaction, the bank can make a maximum loan of
A) $0. B) $800. C) $7,200. D) $8,000.
The opportunity cost of capital owned by the firm should reflect
A. the return foregone by using the capital rather than renting it to another firm. B. acquisition cost. C. wage rate differences. D. both a and b
Perfectly competitive firms
A. are small relative to the size of the market. B. sell homogeneous products. C. are price takers. D. All of the above are correct.