Suppose a valley periodically floods. A dam can be built in the river that would prevent the flooding. Explain how flood control provided by building the dam arguably fits the characteristics of a public good
What will be an ideal response?
The dam would be indivisible since it must be a certain size in order to be effective. Once flood control is provided, new homes can be protected at no additional cost. Any one home's protection does not reduce the protection from flooding for any other home. It would be impossible to exclude someone from the benefits of the flood control, so flood control arguably is a public good.
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Which of the following leads to a recession?
A) An accumulation of money in the economy B) An accumulation of mistakes in the economy C) An accumulation of non-renewable resources in the economy D) An accumulation of irrational decisions among businesses and households
The Slutsky decomposition of the effect of the real wage on a person's labor supply decision suggests that the negative income effect of such a wage change will be larger: a. the smaller is the quantity of labor supplied and the smaller is the effect of non-labor income
b. the smaller is the quantity of labor supplied and the larger is the effect of non-labor income. c. the larger is the quantity of labor supplied and the smaller is the effect of non-labor income. d. the larger is the quantity of labor supplied and the larger is the effect of non-labor income.