Points along a budget line represent the maximum combinations of two commodities that a consumer can afford
a. True
b. False
Indicate whether the statement is true or false
True
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Secured and enforced individual property rights provide individuals with incentive to allocate resources efficiently and effectively, advance technologically, take on strategic risks and trade domestically and internationally
Indicate whether the statement is true or false
The classic example used to discuss the problem of adverse selection is:
A. fruit and produce markets, such as lemons. B. drivers with insurance who tend to drive more recklessly. C. the imbalance of information that exists between a buyer and seller of a used car. D. workers who shirk when their effort isn't closely monitored.
The production possibilities curve represents the fact that:
A) the economy will automatically end up at full employment. B) an economy's productive capacity increases proportionally with its population. C) if all resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced. D) economic production possibilities have no limit.
If a homeowner sells a kitchen table and chairs that she no longer wants to use and does not report the income earned from the sale to the Internal Revenue Service, the value of GDP is
A. understated because this transaction took place in the underground economy. B. overstated because the sale of the furniture is counted twice in GDP calculations. C. unaffected by this transaction because the table and chairs were already counted in GDP as final goods when the homeowner bought them new. D. understated because this purchase was a nonmarket transaction.