According to the text, there is no such thing as a free lunch because
A. No one would pay for lunch anymore if they could get it for free.
B. The producer must charge something to cover the cost of production.
C. Resources used to produce the lunch could be used to produce other goods and services.
D. The government must raise taxes to pay for the lunches.
Answer: C
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Static tax analysis assumes
A) all of the present tax rates will be in place for a minimum of twenty years. B) changes in the tax rates have no effect on the tax base. C) changes in the tax rates have no effect on tax revenue. D) changes in the tax rates will change the tax base.
Which is NOT an example of moral hazard
a. people eat more at all-you-can-eat buffets b. loggers clear-cut a tract of land rather than when paying per tree felled c. Drivers of heavier, safer cares are less likely to run stop signs d. workers on commission work harder than those paid an hourly wage
Consider two goods-one that generates external benefits and another that generates external costs. A competitive market economy would tend to produce: a. too much of both goods, relative to the social optimum
b. too little of both goods, relative to the social optimum. c. too much of the good that generates external benefits relative to the social optimum, and too little of the good that generates external costs. d. too little of the good that generates external benefits relative to the social optimum, and too much of the good that generates external costs.
When public saving falls by $2b and private saving falls by $1b in a closed economy,
a. investment falls by $1b. b. investment falls by $3b. c. investment increases by $1b. d. investment falls by $2b.