The "nonconvergence" problem with the Solow growth model is that
A) a higher return to capital in poor countries should essentially cause all nations to have roughly the same standard of living, yet they clearly do not.
B) if a disturbance dislodges an economy from the steady-state point, it continues moving further from that point indefinitely.
C) technological change is assumed to just "drop from the sky."
D) a rise in the rate of national saving does not raise the growth rate of real GDP per person.
A
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Suppose the price of chocolate chip cookies is $4.00 per pound and the price of a slice of cake is $2.00 per slice. The relative price of cookies in terms of cake is
A) $2.00 per cookie. B) $4.00 per cookie. C) 1/2 slice of cake per cookie. D) 2 slices of cake per cookie.
Suppose that in the market for paper, demand is p = 100 - Q. The private marginal cost is MCp = 10 + Q. Pollution generated during the production process creates external marginal harm equal to MCe = Q. What specific tax would result in a competitive market producing the socially optimal quantity of paper?
What will be an ideal response?