Relating to the Economics in Practice on page 362: The smart phone app which allows skiers at a slope to report weather conditions to others could be considered a form of
A. market signaling.
B. asymmetric information.
C. moral hazard.
D. risk-loving.
Answer: A
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Which of the following best represents monitoring and enforcement costs?
A) Dinesh has to spend time and effort to make sure that the chemical factory is living up to the agreed upon bargain that it will reduce the pollution it is releasing into the local river by 50 percent. B) Laila needs to come up with enough cash to pay the owners of the paper manufacturing plant, its attorneys, accountants, and negotiators so that a bargain can be reached with the paper manufacturer to reduce air pollution. C) Esperanza has to spend time and effort locating and organizing all the other people who have been adversely affected by the strong odors emanating from the local slaughterhouse in order to initiate the bargaining process. D) Rafael has to spend time determining whether the fertilizer manufacturer, the lead smelter, or the oil refinery is the cause of pollution seeping into the groundwater in his local community.
Refer to Scenario 16.1. Initially Sam and Sally are allocated 10 cheese doodles and 10 pretzels each. Which of the following statements are TRUE?
A) The initial allocation is Pareto optimal as it is equitable. B) The initial allocation is Pareto optimal as Sally and Sam have equal amounts of both goods. C) The allocation is not Pareto optimal. An allocation that gave Sam all of the cheese doodles and Sally all of the pretzels would make both of them better off. D) The allocation is not Pareto optimal. An allocation that gave Sam four of the cheese doodles and sixteen of the pretzels (leaving Sally the rest) would make both of them better off.
Which of the following is not included in GDP but occurs hand-in-hand with improvements in GDP?
a. production b. services c. investment d. environmental protection
Why does inflation make nominal GDP a poor measure of the increase in total production from one year to the next?
What will be an ideal response?