Look at today's Wall Street Journal. What is the leading economic news story? With which of the big economic questions does it deal and what tradeoffs does it discuss or imply?
What will be an ideal response?
On May 6, 2014, the top economic news story discussed a report claiming that climate change is already harming the economy. The report asserted that climate change is already bringing extreme weather such as floods, drought, and other weather-related disasters, all of which harm the nation's economy.
This story implicitly discusses the "how" question: Will goods and services be produced in ways that limit climate change or not? It also discusses the "what" question: Will goods and services that limit climate change, such as solar panels, be produced?
The story implicitly illustrates a tradeoff: If choices are taken to limit climate change, such as reducing carbon emissions from generating power, consumers will pay higher prices but the extent of climate change will be decreased.
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Owners of defective used cars have more information about the condition of their vehicles than potential buyers of those used cars. This is an example of:
A. the moral hazard problem. B. a spillover cost. C. a positive externality. D. asymmetric information.
Consumer sovereignty and "dollar votes" guide the market system in dealing with which fundamental economic question?
A. Which output will be produced? B. How is the output to be produced? C. How can the system accommodate change? D. Who is to receive the output?