In general, as individuals undertake additional years of schooling,
A) their stock of human capital increases.
B) the marginal productivity of individuals as workers declines.
C) the marginal benefit to society of the extra years of education increases.
D) the marginal productivity of individuals as workers becomes negative.
Answer: A
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What are the factors that determine a buyer's purchasing decision?
What will be an ideal response?
Suppose a paper mill earns $1,000,000 in profits when it pollutes a river, and it can abate pollution at a cost of $75,000. The effects of the pollution are confined to a single farmer who earns $400,000 if the water he uses from the river is clean and $300,000 if it's polluted. Suppose there is no law preventing the firm from polluting the river. Which of the following describes an efficient outcome in this case?
A. The farmer is unable to pay the owner of the mill enough to get him to stop polluting. B. The owner of the mill pays the farmer $87,500 in compensation for its pollution. C. The farmer pays the owner of the mill $112,500 to stop polluting. D. The farmer pays the owner of the mill $87,500 to stop polluting.
When a shortage occurs in the market for a good, quantity
A. demanded exceeds quantity supplied and the market mechanism pushes the price up, which in turn encourages more production and less consumption. B. supplied exceeds quantity demanded and the price falls, which encourages more production and less consumption. C. demanded exceeds quantity supplied and the market mechanism pushes the price down, which encourages more production and less consumption. D. supplied exceeds quantity demanded and the price rises, which encourages more production and less consumption.
Normative economics is
A) analysis involving value judgments about economic policies; or a statement of "what ought to be." B) analysis that is strictly limited to making either purely descriptive statements or scientific predictions. C) analysis of the behavior of the economy as a whole. D) decision making undertaken by households and business firms.