Sammy has a drone that he values at $1,500. Frank values the same drone at $1,000. The government offers a subsidy of $800 to the buyers of drones, and Sammy and Frank agree on a price of $1,600. The subsidy creates a deadweight loss of

Using the compensating differential approach, the value of a life is calculated as

A) the compensating differential multiplied by the increased chance of death. B) the sum of the compensating differential and the increased chance of death. C) the compensating differential divided by the increased chance of death. D) the difference between the compensating differential and the increased chance of death.

If apples and pears have equivalent opportunity costs,

a. it makes no difference what the economy produces, pears or apples b. the economy always gains from producing more and trading the other c. the production possibilities curve is bowed out d. one apple trades for two pears e. one apple trades for one pear