Answer the following statements true (T) or false (F)
1. Usury laws are a special case of "price floors" applied to the loanable funds market.
2. Usury laws will result in a shortage of loanable funds and nonmarket rationing in credit markets.
3. Normal profit is considered an economic cost.
4. The payment earned for taking uninsurable risks in owning and running a business is called profit.
5. The risk that the firm's employees might get hurt while working is an example of the uninsurable risks faced by an entrepreneur.
1. FALSE
2. TRUE
3. TRUE
4. TRUE
5. FALSE
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If the tax system is made more progressive, the after-tax wages of high-income workers would _____
a. fall b. rise c. stay constant d. rise or fall depending upon job market conditions
Which of the following purported externalities in fact does not distort the allocation of resources? I. An individual's unwillingness to cut his or her own lawn in an otherwise immaculately kept neighborhood. II. Smoke produced by a new firm in an area which raises the costs of other firms. III. A new firm's bidding up skilled wages in an area, thereby raising costs of other firms. IV. An
individual's unwillingness to obtain job training, thereby lowering the total GNP. Possible choices: a. I, III, and IV. b. III and IV. c. III only. d. IV only.
Measures of poverty that fail to account for the value of in-kind transfers
a. understate the actual poverty rate. b. have little effect on the validity of reported poverty rates. c. are generally more reliable measures of actual poverty rates. d. overstate the actual poverty rate.
The demand for computers increases. As a result
A. the wage rate increases in the industry and the quantity supplied of workers increases. B. the wage rate increases in the industry and the quantity demanded of workers falls. C. the quantity demanded of workers increases, the wage rate rises, and the supply of labor increases. D. the demand for workers increases, hiring increases, but wages stay the same since each firm faces a horizontal supply curve of labor.