When economists say that an activity meets the criterion for economic efficiency, they mean
a. a majority of citizens favor the activity.
b. the benefits that result from the activity exceed the costs.
c. the number of people who gain from the activity exceeds the number on whom costs are imposed.
d. the costs that result from the activity exceed the benefits.
B
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The interest rate on long-term bonds is somewhat higher than suggested by the expectations theory because
A) the expectations theory doesn't account for taxes. B) a risk premium exists. C) an inflation premium must be added to long-term bonds. D) the Fed can only control short-term interest rates.
A function that indicates the maximum output per unit of time that a firm can produce, for every combination of inputs with a given technology, is called
A) an isoquant. B) a production possibility curve. C) a production function. D) an isocost function.