The number of seats available in an arena is fixed at 20,000. The equilibrium price for a ticket to a basketball game at the arena is $80. The equilibrium price for a ticket to a hockey game at the arena is $95. Which of the following is true?
A. The demand for hockey games must be more elastic than the demand for basketball games.
B. The demand for each hockey game must be higher than the demand for each basketball game.
C. The supply of hockey games must be less elastic than the supply of basketball games.
D. Basketball games must be more expensive to produce than hockey games.
Answer: B
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Which policy tool allows the Federal Reserve the greatest control over monetary policy?
A) the reserve requirement B) open market operations C) lender of last resort D) the discount rate
When externalities cause markets to be inefficient,
a. government action is always needed to solve the problem. b. private solutions can be developed to solve the problem. c. given enough time, externalities can be solved through normal market adjustments. d. there is no way to eliminate the problem of externalities in a market.
If the government wants to increase economic efficiency, it should:
A. never subsidize goods. B. subsidize goods that entail positive externalities. C. tax goods that entail positive externalities. D. never tax goods.
Greater income equality that is achieved through the redistribution of income is thought to:
A. Stimulate innovation and entrepreneurship B. Promote economic efficiency in the economy C. Increase incentives to work, save, and invest in the economy D. Come at the opportunity cost of reduced production and income