In a centrally planned economy
A. consumers do not have to consider prices when shopping.
B. prices are zero.
C. the government sets prices and decides how much of each good is to be produced.
D. producers have an incentive to produce those goods most desired by consumers at the lowest cost.
C. the government sets prices and decides how much of each good is to be produced.
You might also like to view...
With a temporary income tax surcharge, according to the ________, household consumption should ________
A) PIH; fall as disposable income falls B) PIH; rise since the decrease is disposable income is temporary C) LCH; fall since disposable income over the lifecycle falls D) None of the above is correct since a temporary change affects neither permanent income or relative lifecycle earnings.
The marginal social cost of air quality increases as air quality increases. If the dirtiest production process would create 700 tons of pollutants, then
a. eliminating the first 20 tons of pollution is cheaper than eliminating the last 20 tons b. eliminating the last 20 tons of pollution is cheaper than eliminating the first 20 tons c. more damage will be done by the first 20 tons of pollution than by the last 20 tons d. more damage will be done by the last 20 tons of pollution than by the first 20 tons e. the optimal level of air quality is to reduce pollution by 700 tons
Davy's Doggie Daycare rents a warehouse and field for $2,000 a month to house its boarding pooches. Farmer Fred owns the property, he used to use it for farming and made $3,000 a month, but has since retired. What is the cost of the warehouse and field to Davy?
A. It is an implicit cost of $3,000. B. It is an explicit cost of $2,000. C. There is both an explicit and implicit cost totaling $5,000. D. It is an implicit cost of $0.
Government spending affects aggregate demand directly, and tax changes affect aggregate demand indirectly. Therefore, changes in
A. taxes are ineffective in changing aggregate demand. B. government spending affect aggregate demand more quickly than changes in taxes. C. taxes are virtually useless as a stabilization tool. D. government spending should be used with great caution.