A cake is to be shared by two people. Both desire the largest piece possible. One of the two will cut the cake. Under which of the following situations will the cutter adopt a Rawlsian social welfare function?
A) The person cutting the cake chooses the first piece.
B) The person not cutting the cake chooses the first piece.
C) The two individuals will bid for the right to cut the cake and choose first.
D) The two individuals will toss a coin for the right to cut the cake and choose first.
B
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Suppose Fred's marginal utility of an extra dollar of income is 56, and Sally's is 34 . If a dollar is taken from
a. Sally and given to Fred, the economy's total utility will rise by 22 units b. Fred and given to Sally, the economy's total utility will rise by 22 units c. Sally and given to Fred, the economy's total utility will rise by 34 units d. Sally and given to Fred, the economy's total utility will rise by 56 units e. Fred and given to Sally, the economy's total utility will rise by 34 units
The purchasing power of money decreases as the:
A. production decreases. B. price level increases. C. employment increases. D. demand increases.
If a tax is placed on one good and not another, the effect that causes you to buy more or less of the taxed good because you have less real buying power is called
A. income effect. B. domino effect. C. net effect. D. substitution effect.
Refer to the graphs and information below. It can be deduced that:
Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves for the two countries are shown in the graphs below.
A. Greece has a comparative advantage in chemicals
B. Greece has the absolute advantage in both products
C. Italy has a comparative advantage in chemicals
D. It is more costly in terms of resources to produce steel in Italy