The existence of government programs that provide in-kind transfers have ______.
a. more or less eliminated income inequality
b. probably caused income inequality estimates to be overstated
c. probably caused income inequality estimates to be understated
d. created greater amounts income inequality
b. probably caused income inequality estimates to be overstated
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If a firm hires one worker and eliminates four units of capital, and hires one more worker and replaces three more units of capital, keeping output constant, then
A) workers and capital are perfect substitutes. B) the firm is operating inefficiently because capital is more efficient than workers. C) the firm is experiencing a diminishing marginal rate of technical substitution. D) there are decreasing returns to scale.
A subsidy is similar to a reverse tax—instead of taking money away from buyers (or sellers), the government gives money back to buyers (or sellers).
a. true b. false