Assume that society places a higher value on the last unit of X produced than the value of the resources used to produce that unit. With no spillovers, this information means that:
A. total cost is greater than total revenue.
B. price is greater than marginal cost.
C. marginal cost is greater than price.
D. resources are being overallocated to X.
Answer: B
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What is the problem with paying plant managers in multi-plant firms according to how much each plant produces relative to its capacity?
A) Managers in low-cost or high-capacity plants could be penalized, in percentage terms, for their overproduction. B) The production problem in multi-plant firms is usually how to lower production to increase market power, not how to increase production. C) Managers in high-cost or low-capacity plants could be penalized for production constraints over which they have no control. D) Managers would have an incentive to understate the productive capacity of their plants. E) Managers would have an incentive to overstate the productive capacity of their plants.
Which government program would be considered an "entitlement" program?
A) national defense B) subsidies for mass transportation C) law enforcement in major U.S. cities D) Social Security
As methods of economic organization, the market and the public sector are similar in which of the following ways?
a. Income and power are distributed equally in both sectors. b. In both sectors, economic activity is undertaken only when it satisfies the criterion for economic efficiency. c. In both sectors, economic exchange is completely voluntary. d. Someone must cover the cost associated with the provision of scarce goods in both sectors.
When total spending is less than production, GDP will decrease.
Answer the following statement true (T) or false (F)