Discuss how economists calculate NI, PI and DI
GDP ? depreciation = NI ? profits ? FICA + transfer payments + net interest + dividends = PI ? personal income taxes = DI.
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Mark and Anthony are participating in a trust game. Mark is given a locked box containing five $100 bills and a key. He can either unlock the box himself or he can give it to Anthony
Anthony can either unlock the box himself or return it to the moderator of the game. If Mark unlocks the box himself, he will get $200 and Anthony will get $100 while the rest will be taken back. If Anthony unlocks the box, they will receive $250 each. If Anthony returns the box to the moderator, he will receive $300, while Mark will not get any money. What will the equilibrium outcome of this game be?
Each of the following is a challenge that society's would face in trying to use the second welfare theorem to achieve equity without sacrificing efficiency EXCEPT:
A. endowments aren't always easily observable. B. wealth isn't an endowment. C. lump-sum transfers distort choices. D. transfers based on wealth aren't lump-sum transfers.
Which of the following statements about the income effect of a price change is NOT true?
A. It affects consumption by removing compensation. B. It always involves a parallel shift in the budget line. C. It isolates the influence of a change in relative prices. D. It reflects the fact that a price change affects a consumer's purchasing power.
When government intervenes in the production process because external costs exist, it typically attempts to shift the industry's
A) demand curve to the right. B) demand curve to the left. C) supply curve to the right. D) supply curve to the left.