How does the government determine the quota amount that will produce an efficient use of a common resource?
What will be an ideal response?
The government must determine the marginal social benefit and the marginal social cost of the common resource. By equating marginal social benefit to marginal social cost, the efficient use of a common resource is determined. A quota is set to this level of production. Producers are assigned a portion of this quota. As long as no one cheats on his or her quota, the efficient outcome occurs.
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Which of the following is the rate of unemployment that occurs after all adjustments in the labor market have occurred?
A) the structural rate of unemployment B) the cyclical rate of unemployment C) the natural rate of unemployment D) the frictional rate of unemployment
The air force just hired a defense contractor to produce one hundred fighter jets. This action answered which basic economic question?
a. What is the best method of production? b. How will the goods and services be produced? c. Who will get the goods and services? d. What goods and services will be produced?