A political function of government is to
A. encourage the workings of the price system.
B. provide public goods.
C. encourage the consumption of government-sponsored goods.
D. correct for externalities.
Answer: C
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Scott is a woodworker and charges $125 an hour for his time manufacturing custom-made wood products. For his wife's birthday, he designs and creates an intricate birdseye maple jewelry box that takes him 15 hours to complete. By how much and in what
direction does GDP change as a result of his efforts? A) GDP rises by $1,875. B) GDP is not affected by Scott's production of the jewelry box. C) GDP rises by $125. D) GDP falls by $1,875.
Which type of barrier to entry allows an electric company to maintain a monopoly over the production of electricity?
A. economies of scale B. diseconomies of scale C. ownership of a scarce factor of production D. a patent