Figure 6-2
illustrates the four possibilities of the structure of production and consumption for a good or service. When the structure of production and consumption for a good places it in quadrant B,
a.
consumers have little incentive to search out and patronize low-cost suppliers.
b.
private producers of such goods will have little incentive to operate efficiently and to keep prices low.
c.
goods and services will only be supplied if consumers are willing to pay an amount sufficient to cover their production costs.
d.
both a and b, but not c, will be true.
d
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This year Gus purchased a used 1972 vehicle from Wee-Rob-U Auto Sales. The dealer paid $500 for it yesterday, and sold it to Gus for $3500. In principle, what happens to GDP?
A) Nothing, because the vehicle was already accounted for in 1972. B) Nothing, because Gus was ripped off. C) It increases by $3000. D) It increases by $3,500. E) It increases by $6,500.
Which of the following would NOT be expected to increase labor productivity?
A. Technological advance B. The acquisition of more education and training by the labor force C. An increase in the size of the labor force D. The realization of economies of scale