Government can step in to make economic decisions that address problems markets create, but government action is also imperfect and may not reflect majority views. What situation can arise in which it would be very difficult to identify which choice the majority of voters approves?
a. Budget trading
b. Vote cycling
c. Logrolling
d. Pork-barrel spending
b. Vote cycling
Majority votes can run into difficulties when more than two choices exist. A voting cycle occurs when, in a situation with at least three choices, choice A is preferred by a majority vote to choice B, choice B is preferred by a majority vote to choice C, and choice C is preferred by a majority vote to choice A. In such a situation, it is impossible to identify what the majority prefers. While government may play a useful role in addressing the problems of markets, government action is also imperfect and may not reflect majority views.
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Structural unemployment is:
A. short-term unemployment that is associated with the process of matching workers with jobs. B. the extra unemployment that occurs during periods of recession. C. long-term and chronic unemployment that exists even when the economy is producing at a normal rate. D. the additional unemployment not captured in official statistics resulting from discouraged workers and involuntary part-time workers.
Gamble A results in $10 with probability 0.4 and $30 with probability 0.6. Gamble B results in $20 with probability 1. If an individual prefers Gamble A to Gamble B, the independence axiom implies that he prefers Gamble C that gives $0 with probability 0.5, $10 with probability 0.2 and $30 with probability 0.3 to Gamble D that results in $20 with probability 0.5 and $0 with probability 0.5.
Answer the following statement true (T) or false (F)
Refer to Scenario 1-1. Had the firm not produced and sold the last 3,000 cell phones, would its profit be higher or lower, and by how much?
A) Its profit will be $6,000 lower. B) Its profit will be $700 lower. C) Its profit will be $700 higher. D) Its profit will be $6,700 higher.
An increase in total utility would be depicted using indifference curve analysis as: a. a movement down along an indifference curve to the southeast
b. a movement up along an indifference curve to the northwest. c. a movement from one indifference curve to another located to the northeast. d. a movement from one indifference curve to another located to the southwest.