Trish grows oregano in her backyard to use in her homemade pesto sauce. How is this gardening included in GDP?
a. It is included in real GDP.
b. It is included in nominal GDP.
c. It is not included in GDP.
d. It is included as an intermediate good.
c
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A good salesperson can sell $1,000,000 worth of goods, while a poor one can sell only $100,000 worth of goods. Job applicants know if they are good or bad, but the firm does not. A firm will offer job applicants a choice between a fixed salary and a 20% commission. Assuming risk-neutral salespersons and no opportunistic behavior, what level must the fixed salary be so that the firm can determine
a prospective good salesperson from a poor one? A) between $0 and $20,000 B) between $20,000 and $200,000 C) greater than $200,000 D) zero
Some advocates of antipoverty programs claim that fighting poverty is a public good. Describe why government intervention may be necessary to reduce poverty