What problem are mechanism designers attempting to overcome when they "design mechanisms" to provide public goods?
What will be an ideal response?
The essential problem is that, while we know how to implement the efficient level of public goods if we know people's demands, we know we can't just ask them for their demands so long as we link what they have to pay to how much they demand the public good. Mechanism design attempts to devise a "message game" in which individuals send just enough information for us to be able to implement the public good and fund it -- with truth telling emerging as the dominant strategy. (It turns out not all of that is possible, but different mechanisms "get close" in different ways.)
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
All of the following are sunk cost investments that precommit an incumbent to aggressively defend market share and the cash flow prior to threatened entry except
a. reputational investments in company logos (e.g., Beatrice) b. automobile showrooms c. retail displays which hold only L'eggs egg-shaped hosiery packages d. neon signage for an independently owned Krispy Kreme store e. excess capacity in a declining industry
Which of the following will be recorded as a debit entry in the balance of trade in merchandise account?
a. A U.S. car manufacturer selling a car to a resident of India. b. A pub owner in Liverpool importing vodka from a U.S. manufacturer. c. A U.S. textile manufacturer buying rawmaterial from farmers in Indonesia. d. A Chinese car manufacturer importing car engines and other spare parts from a U.S. manufacturer. e. A fashion designer from Michigan exporting readymade garments to a dealer in Copenhagen.
If people can be prevented from using a certain good, then that good is called
a. rival in consumption. b. excludable. c. a common resource. d. a public good.