Briefly explain the similarities and differences of decision making by the market sector and the public sector
What will be an ideal response?
The similarities of the two sectors include the presence of opportunity costs, competition by serving individual interests, and an incentive structure. The main differences between decisions by the two sectors are that the public sector often makes decisions on goods at zero price, by use of force, and by a majority voting system instead of "dollar votes."
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Which of the following statements is true about purchasing power parity (PPP)?
a. PPP is the normal state between two nations because international markets are perfectly competitive. b. PPP is the normal state between two nations because of government regulations and central bank intervention. c. PPP is the normal state between two nations because interest rates, the spot exchange rate, and the forward exchange rate all adjust to create this condition. d. PPP is the normal state between two nations because arbitrageurs take advantage of any imbalances. e. PPP is rarely the case for most nations in the short-run, but exchange rates tend to move in the direction of PPP in the long run.
What is the principle distinction between explicit costs and implicit? costs?
A. There is no real difference between explicit and implicit costs. B. Implicit costs are usually larger than explicit costs. C. Implicit costs must be paid immediately, but explicit costs need to be paid only in the long run. D. Explicit costs are direct, out-of-pocket payments, while implicit costs are all foregone opportunity costs