Which of the following activities would be included in GDP?
A. You pay a friend $30 to bake a cake.
B. You buy a cake from a local bakery for $30.
C. You bake a cake for yourself.
D. All of these would be included in GDP.
Answer: B
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If a public good is financed through Lindahl prices, those whose total willingness to pay for the public good is high will end up paying a higher Lindahl price than those whose total willingness to pay for the public good is low.
Answer the following statement true (T) or false (F)
The efficiency-wage theory of worker turnover suggests that firms with higher turnover will have
a. higher production costs and higher profits. b. higher production costs and lower profits. c. lower production costs and higher profits. d. lower production costs and lower profits.
A tax that takes a larger proportion of income from low-income groups than from high-income groups is a:
A. stabilizing tax. B. regressive tax. C. proportional tax. D. progressive tax.
The economic problem with Medicare financing is that
A) there is a built-in incentive to provide fewer services by doctors. B) there is a built-in incentive to travel to Canada to receive medical services. C) the cost of providing services is falling annually. D) there is a built-in incentive to consume more services.