Because a type of fish is on the verge of extinction, the government imposes rules that prohibit fishing in the publicly spawned grounds. At first, owners of fishing boats complain about this restriction on where they can fish, but soon they notice that the number of adult fish swimming outside the protected area is much higher than it was before. With the restriction, each fishing boat ends up catching more fish than it did before the restriction was in place. Which of the following principles of economic interaction best describes this scenario?
A) Markets usually lead to efficiency.
B)There is a trade-off between equity and efficiency.
C) When markets do not achieve efficiency, government intervention can improve welfare.
D) Markets move toward equilibrium.
Ans: C) When markets do not achieve efficiency, government intervention can improve welfare.
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Suppose the population is 220 million people, the labor force is 150 million people, the number of people employed is 130 million and the working-age population is 175 million people. What is the unemployment rate?
What will be an ideal response?
If the short-run aggregate supply increases by less than the long-run aggregate supply, then, at the short-run equilibrium,
A) GDP will be above potential GDP. B) aggregate demand will increase. C) GDP will be below potential GDP. D) GDP will be equal to potential GDP.