When steady state capital per worker is above the golden-rule level, we know with certainty that an increase in the saving rate will
A) increase consumption in both the short run and the long run.
B) decrease consumption in both the short run and the long run.
C) decrease consumption in the short run, and increase it in the long run.
D) increase consumption in the short run, and decrease it in the long run.
E) none of the above
B
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Refer to Scenario 12.1. What is the probability of Paula trying to rescue the man and Simon not helping?
A) 9% B) 21% C) 49% D) 70%
What problem is caused by subsidizing a natural monopoly regulated using a marginal cost pricing rule?
A) The regulated firm ends up earning an economic profit. B) Consumers pay too much for the product of the monopoly. C) This policy is a two-part tariff, which creates inefficiency. D) The taxes required to gain the revenue used as the subsidy result in a deadweight loss that subtracts from gains in efficiency which result from use of the marginal cost pricing rule. E) The regulated firm goes out of business if it is subsidized.