Three economic questions must be determined in all societies. What are they?
a. How much will be produced? When will it be produced? How much will it cost?
b. What will the price of each good be? Who will produce each good? Who will consume each good?
c. What is the opportunity cost of production? Does the society have a comparative advantage in production? Will consumers desire the goods being produced?
d. What goods will be produced? How will goods be produced? Who will get the goods produced?
d
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The Coase theorem is the proposition that if property rights exist, the number of parties is small, and transactions costs are low
A) external costs result in deadweight losses. B) external benefits result in deadweight losses. C) private transactions are efficient. D) public transactions are efficient.
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 the law guarantees the farmer access to clean water from the river. Which of the following describes an efficient outcome in this case?
A. The owner of the mill is unable to pay the farmer enough to secure his permission to pollute the river. B. The owner of the mill pays the farmer $87,500 for his permission to pollute the river. C. The owner of the mill pays the farmer $112,500 for his permission to pollute the river. D. The farmer pays the owner of the mill $87,500 to stop polluting.
In general, which form of business organization has the greatest capacity to raise large sums of financial capital?
A) sole proprietorships B) partnerships C) limited partnerships D) corporations
Since the end of World War II, the U.S. has almost always had rising prices and an upward trend in real GDP. To explain this
a. it is only necessary that long-run aggregate supply shifts right over time. b. it is only necessary that aggregate demand shifts right over time. c. both aggregate demand and long-run aggregate supply must be shifting right and aggregate demand must shift farther. d. None of the above cases would produce rising prices and growing real GDP over time.