Suppose Head Start proponents could show that it saves $2000 per child in reduced need for special education and $3000 per child in reduced need for children to repeat first or second grade, but that these benefits accrue two to three years after program participation. Suppose there are no other benefits and that the program costs $4000 per child. With this data, you
A. would have to argue that Head Start is simply the "right" thing to do for the kids.
B. could not conclude that the program makes sense, because present values depend on the interest rate.
C. could conclude that the program makes sense as an investment.
D. would have to concede that the program is not worth the costs.
Answer: B
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The longer any price change lasts over time, the
A) more difficult it is to alter quantity demanded. B) the more quickly quantity demanded will return to its original level. C) the longer the short-run equilibrium will continue to be the short-run equilibrium. D) more quantity demanded will change.
Assuming one can derive a correct input-output table, are there still any reasons to prefer the market to central planning?