Suppose that Steve and Susie each perceives $200 of marginal benefit from a proposed new park, whereas Elizabeth perceives $800. If the proposed tax levied on each for the park would be $300, a majority vote will:
A. defeat this project and resources will be underallocated to it.
B. defeat this project and resources will be efficiently allocated.
C. pass this project and resources will be underallocated to it.
D. pass this project and resources will be overallocated to it.
Answer: A
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Friedman and Phelps concluded that
a. in the long run the Phillips curve is downward sloping, which is consistent with classical theory. b. in the long run the Philips curve is downward sloping, which is inconsistent with classical theory. c. in the long run the Phillips curve is vertical, which is consistent with classical theory. d. in the long run the Phillips curve is vertical, which is inconsistent with classical theory.
If two individuals have identical schooling, their incomes will be equal.
Answer the following statement true (T) or false (F)
In which of the following situations would you hedge using a futures contract?
A. You are long in the cash market, the price is at a historical high, and you are certain that the price will decline. B. You are long in the cash market, the price is at a historical low, and you are certain that the price will increase. C. You are short in the cash market, the price is at a historical high, and you are certain that the price will decrease. D. You are short in the cash market, the price is at a historical low, and you are certain that the price will decrease further.
A pure public good is such that
A. both rivalry and exclusivity hold. B. neither rivalry nor exclusivity hold. C. exclusivity holds, but rivalry does not. D. rivalry holds, but exclusivity does not.