If households were to switch production away from an equal division of chores
(e.g., doing dishes, mowing the lawn, etc.) to a system based on specialization and trade, the efficiency of household production would probably ________ and leisure time would probably ________.
A) decrease; decrease
B) decrease; increase
C) increase; increase
D) increase; decrease
C
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The argument that society should be in favor of changes that benefit some people without making others worse off is known as
A) a positive externality. B) the Coase Theorem. C) the cost-benefit principle. D) the Pareto principle.
Annie's Breakfast Corner charges $5.00 per meal. Annie's costs for servers, cooks, electricity, food, etc. average out to $3.95 per meal. Her costs for rent, insurance cleaning supplies, and business license average out to $1.25 per meal. Since the market is highly competitive, Annie should: a. raise her prices above the level set by the market
b. keep the business open in the short run but plan to close the business in the long run. c. keep the business open in the short run and plan to expand the business in the long run. d. lay off her staff, break her lease, and close the business immediately.