The opportunity cost of providing a public good to an additional individual is
A) infinite.
B) zero.
C) impossible to determine.
D) high because of the exclusion principle.
Answer: B
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An increase in the tax rate on dividends, other things equal, is likely to result in a(n):
A) increased demand for bonds due to an increase in the expected return on bonds relative to stocks B) increased supply of bonds due to an increase in the expected return on bonds relative to stocks C) reduced demand for bonds due to a decrease in the expected return on bonds relative to stocks D) reduced demand for bonds due to an increase in the expected return on bonds relative to stocks
Four friends decide to meet at a Chinese restaurant for dinner. They decide that each person will order an item off the menu, and they will share all dishes. They will split the cost of the final bill evenly among each of the people at the table. A Tragedy of the Commons problem is likely for each of the following reasons except
a. each person has an incentive to eat as fast as possible since their individual rate of consumption will not affect their individual cost. b. there is an externality associated with eating the food on the table. c. when one person eats, he may not take into account how his choice affects his friends. d. each dish would be both excludable and rival in consumption.
A wheat farmer sells wheat in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of wheat is $2 a bushel, the wage rate is $10, the farmer employs five workers and the marginal product of the fifth worker is 3 bushels. What would you advise this farmer to do?
A. Do nothing because the wage rate and the marginal product of the last worker hired are equal. B. Reduce employment because the wage paid is more than the marginal revenue product. C. Reduce the product price so that the wage and marginal revenue product will be equal. D. Increase employment because the wage paid is less than the marginal revenue product.
In higher education, the last 20 years have seen
A. a higher level of aid focused on a smaller number of students. B. a dramatic reduction in federal spending on all forms of aid. C. fewer students become eligible for some form of aid. D. more students become eligible for some form of aid.