There are 10,000 families in a neighborhood that are affected by noise pollution from a local factory. The noise could be reduced if the company spent $5,000 on technological improvements. The company agrees to make these improvements if the affected families contribute the $5,000. Since there are so many families, they fail to come to a resolution to which they will all agree. This outcome is an example of the
A. collective action problem (that arises when there are too many parties involved).
B. drop-in-the-bucket problem.
C. Coase theorem.
D. free-rider problem.
Answer: A
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Suppose the government of South Island has fixed the value of its currency, the Islandia, at $0.50 per Islandia, but the market equilibrium value of the Islandia is $0.75 per Islandia. In order to maintain the official value of the Islandia the Central Bank of South Island must either ________ domestic interest rates or supply Islandia, which causes the supply of international reserves to ________.
A. raise; decrease B. lower; increase C. lower; decrease D. raise; increase
Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
Which of the following countries has the second highest population in the world?
A) Indonesia B) Russia C) India D) China
The price charged by a monopolist is socially inefficient because the price
A) exceeds the true marginal cost of the resources used. B) is less than the opportunity cost of the resources used. C) puts the monopolist into a higher tax bracket. D) is too low.