Allocative efficiency means that among the points on the production possibility frontier, the point that is chosen is socially preferred. In this scenario, the measure of social benefit reflects:
a. what buyers are willing to pay for the product.
b. a noneconomic benefit, such as improving people’s lives.
c. lowering the cost of goods so that more people may purchase them.
d. the social values of the corporation.
a. what buyers are willing to pay for the product.
Think about the price that is paid for a good as a measure of the social benefit received for that good; after all, willingness to pay conveys what the good is worth to a buyer.
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To compute the CPI, the Bureau of Labor Statistics (BLS) compiles a "basket of goods" that ________; each price in the index is weighted by ________
A) are produced in the United States; an expenditure survey B) the average farmer produces; how long it takes for the particular good to reach the market C) the average urban consumer buys; the quantity of the good that goes into the basket D) only members of congress purchase; a "luxury" score E) is typical of consumers below the poverty line; the perceived quality of the good
When economists describe the theory of consumer choice, they
a. portray people as simple and methodical with perfectly predictable patterns of behavior. b. assert that consumer's decisions are based on which goods and services give them the greatest utility within their limited incomes. c. point out that consumers rarely consider utility in their purchase decisions; they look at other factors like convenience, peer behavior, and price. d. assert that the retail price is the only variable consumers really consider in making their purchasing decisions. e. admit that consumer behavior is random and there is no credible economic theory to explain the phenomenon.
Suppose that MPL = 200 and MPK = 240. If R = 30, then at which of the following wages would the firm want to hire fewer workers and more capital?
A. W = 23 B. W = 24 C. W = 25 D. W = 26
John Maynard Keynes believed the ideas of economists to be
a. generally incorrect. b. powerful. c. academic and without practical application. d. rantings of madmen.