Why are economists so often skeptical of replacing GDP as a measure of well-being?
A. Economists see little wrong, other than measurement errors, in the way GDP is computed.
B. Economists think that the alternatives cannot take changes in price level into account in an acceptable manner.
C. Economists believe that only market activity can be and should be measured.
D. The alternatives involve value judgments about social goals that some or many economists find controversial.
Answer: D
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Which of the following statements is TRUE?
A) As a result of specialization some workers will be displaced and harmed in the short run by free trade. B) Free trade leads to lower wages for all workers in both nations. C) Specialization will result in a decline in an industry and none of those workers will be able to find other jobs. D) Free trade will benefit all workers in a nation equally.
Refer to Figure 1A.1. Assume that the graph in this figure represents the demand and supply curves for used cars, which are inferior goods. An increase in income would be represented by a shift from
A) Demand 1 to Demand 2. B) Demand 2 to Demand 1. C) Supply 1 to Supply 2. D) Supply 2 to Supply 1.
Scott and Cindy both produce only pizza and tacos. In one hour, Scott can produce 20 pizzas or 40 tacos. In one hour, Cindy can produce 30 pizzas or 40 tacos. Cindy's opportunity cost of producing 1 taco is
A) 3/4 of a pizza. B) 1 pizza. C) 30 pizzas. D) 40 pizzas. E) 1 1/3 tacos.
If a natural monopoly is told to set price equal to average cost, then the firm
A) is not able to set marginal revenue equal to marginal cost. B) automatically also sets price equal to marginal cost. C) will make a substantial economic profit. D) will incur an economic loss. E) sets a price that is lower than its marginal cost.