For a government subsidy on a good with an external benefit to result in the efficient amount of output being produced, what must be done?
A) The size of marginal external benefit must be accurately determined.
B) The government must produce the product.
C) Private production and private consumption must both be directly subsidized.
D) The quantity demanded must be decreased to the efficient amount.
E) Private production without the subsidy must be prohibited.
A
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The United States uses tax funds to build and repair the interstate highway system and to provide health care services via Medicare. Suppose Medicare services are on the horizontal axis and highway miles are on the vertical axis of a PPF
If the government decides to reduce funding to Medicare, this change would be shown as A) a shift out of the PPF. B) the PPF becoming flatter. C) a movement down along the PPF. D) a movement up along the PPF.
Refer to Table 7.1. What is the average product of the 4th worker?
A. 4 units of output
B. 3 units of output
C. 16 units of output
D. 6 units of output
The prisoner's dilemma is a game of strategy:
A. in which people make rational choices that lead to a less-than-ideal result for all. B. in which people make rational choices that lead to the ideal result for all. C. that leads everyone to be as well off as possible without making another worse off. D. that leads people to make irrational choices that lead to the ideal result for all.
Montesia is a country that produces kiwis. After the market for kiwis in Montesia is opened to international trade, there is a decrease in the domestic quantity supplied of kiwis and an increase in the domestic quantity demanded of kiwis. Montesia should: a. import kiwis
b. export kiwis. c. not participate in trade. d. impose a tariff on kiwis.