According to the Tiebout hypothesis,
A. under certain conditions, when externalities are present, private parties can arrive at the efficient solution without government involvement.
B. an efficient mix of public goods is produced when local land/housing prices and taxes reflect consumer preferences.
C. an optimal (or most efficient) level of output exists for every public good.
D. a good or service is usually so costly that its provision generally does not depend on whether any single person pays.
Answer: B
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Use the following graph, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product, to answer the next question.
Sd + Q is the product supply curve after an import quota is imposed. A quota of y?w will result in an increase of domestic producer surplus equal to area(s)
A. E + F + K. B. E. C. E + F + G + H + J. D. K.
Jackson buys an automobile insurance policy and then decides to drive recklessly because he knows he is insured in case he has an accident. This describes the problem of
A) adverse selection. B) asymmetric information. C) moral hazard. D) risk pooling.
For a perfectly competitive corn grower in Nebraska, the marginal revenue curve is
A) downward sloping. B) the same as its demand curve. C) upward sloping. D) U-shaped. E) vertical at the profit maximizing quantity of production.
Generally speaking, resources are used more wastefully and carelessly when
A) users obtain the resources through the market process. B) users do not have to pay the opportunity cost for using resources. C) users use resources to only advance the projects they are interested in. D) users privately own resources.