What is equity, and how does it differ from efficiency?
What will be an ideal response?
Equity refers to the fair distribution of economic benefits. In economics, efficiency refers to least cost production (productive efficiency) and producing according to human preferences (allocative efficiency).
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The Bubby Gum factory produces bubble gum. Joanne is one of the employees, and she produces 10 packs of bubble gum per hour. Joanne's money wage rate is $12 per hour. Based on this information, the Bubby Gum company should
A) fire Joanne because she creates a loss for the firm. B) increase its demand for labor. C) decrease Joanne's wage rate because she is paid too much. D) keep Joanne because she creates a profit for the firm. E) None of the above answers is correct because more information about Joanne's real wage is needed to decide what to do.
Refer to Table 19-7. Suppose that a simple economy produces only four goods and services: iPods, t-shirts, bottled water, and oranges. Calculate nominal GDP for this simple economy
What will be an ideal response?