Governments can most effectively encourage a firm to produce the efficient level of output of a good whose production causes a beneficial externality by
a. increasing the demand at every price for the good.
b. subsidizing the production of the good.
c. taxing the production of the good.
d. imposing a price ceiling on the good.
b
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The impact of a change in taxes on income is likely to be less than the effect resulting from a change in government spending since ________
A) the federal government typically operates in a deficit situation B) exports and imports can only assume positive values, but net exports can be positive or negative C) changes in the supply of money will be necessary if government spending is increased D) changes in taxes exert an indirect impact on total spending through changes in consumption
Philip is an average contractor in town, and he earns $40,000 a year. Billy is the best contractor in town, and he earns $480,000 a year. Philip's contracting services
a. are valued more by the market relative to Billy's and that explains why his income is higher than Billy's. b. are valued less by the market relative to Billy's and that explains why his income is higher than Billy's. c. are valued less by the market relative to Billy's and that explains why his income is lower than Billy's. d. are more expensive because he receives a compensating differential.
Suppose that, as a firm's total production (or output) increases, the firm's manager correctly observes that an economy of scale is occurring. The manager must have noticed that:
a. ?per-unit costs increase as output increases b. ?per-unit costs decrease as output increases c. ?per-unit costs remain constant as output increases d. ?output does not affect per-unit costs
Advocates of fixed rules believe that politicians focus more on reelection than on sound policy.
Answer the following statement true (T) or false (F)