When does the free-rider problem arise?
A) when someone who benefits from a good does not have to contribute to paying for it
B) when a firm does not have to advertise, because its customers recommend the product to their friends
C) when policymakers ignore opportunity costs in making decisions
D) when production of a good generates pollution
Answer: A
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Which of the following is a normative question about an initiative to impose a new tax?
A.All of the above are normative considerations. B. What is the expected impact on producers and consumers? C. How much revenue is the tax expected to raise? D. Is the tax considered to be in the public interest?
If a country must decrease current consumption to increase the amount of capital goods it produces today, then it must
A) be using resources inefficiently today, but will be more efficient in the future. B) be producing along the production possibilities frontier today and its production possibilities frontier will shift outward if it produces more capital goods. C) must be producing outside the production possibilities frontier and will continue to do so in the future. D) must not have private ownership of property and will have to follow planning authorities' decisions today and in the future.