Efficiency is attained when
a. total surplus is maximized.
b. producer surplus is maximized.
c. all resources are being used.
d. consumer surplus is maximized and producer surplus is minimized.
a
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Answer the following statement(s) true (T) or false (F)
1. In the absence of transactions costs, changes in property rights have no effect on economic efficiency. 2. In the absence of transactions costs, changes in property rights have no effect on the distribution of income. 3. Changes in property rights will not affect the allocation of resources as long as transactions costs are zero and the subsequent effects on market demand are negligible. 4. The weak Coase theorem is true when reallocation of property rights have negligible income effects . 5. According to the Coase Theorem, in the absence of transactions costs, recipients of an external benefit can be expected to offer a bribe in exchange for greater production.
Show graphically the effect of technological advance on the price of music downloads. In a separate graph, show what happens to the price of CDs as a secondary effect of the new download technology.
What will be an ideal response?
The two stage least squares estimator is less efficient than the ordinary least squares estimator when the explanatory variables are exogenous.
Answer the following statement true (T) or false (F)
From 2008 to 2010 the Chinese government pegged the exchange-rate value of the Chinese yuan to the U.S. dollar. Briefly explain the effects of the pegged rate and Chinese government intervention to defend the pegged rate on the Chinese economy. Then, starting in mid-2010, the Chinese government allowed the yuan to appreciate slowly relative to the U.S. dollar. Briefly explain the effects of the changed exchange rate policy on the Chinese economy.
What will be an ideal response?