A country has pasture land where cattle are allowed to graze. However, this land is threatened by overgrazing, which can lead to erosion and a reduction in the value of the land. Which of the following solutions is socially optimal?
a. Selling the pasture land to a private buyer and letting him control the grazing time
b. Providing extra security to prevent grazing
c. Using a layer of artificial grass to prevent grazing
d. Constructing fences and allowing grazing only in one part of the pasture land at a time
a
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In a competitive market with high cost and low cost consumers (where firms are unable to tell consumer types apart), any screening costs incurred by firms will be passed on to low cost consumer but not to high cost consumers.
Answer the following statement true (T) or false (F)
The crowding-out effect of an expansionary fiscal policy is the result of government borrowing in the market which
A. increases interest rates and net investment spending in the economy. B. increases interest rates and decreases net investment spending. C. decreases interest rates and increases net investment spending. D. decreases interest rates and net investment spending.
Which of the following types of bond typically has the highest yields? (The letters are Moody's ratings.)
a. a federal government bond b. a corporate bond rated Aaa c. a corporate bond rated Aa d. a corporate bond rated A e. a corporate bond rated Baa
A manufacturing company designs and produces an incredibly efficient solar heating system for large buildings and earns very large profits on it. Which of the following is true?
A. The profits this firm earns aren't deserved, as the firm did not take any risks. B. The profits this firm earns are a return for an innovation. C. This firm must not be in a competitive market if it was able to earn a profit. D. both A and C