An economist argues that the states that have spent the most on higher education in the last 25 years have experienced the least economic growth. One might conclude that higher education:
A. is a nonexcludable service.
B. does not have important negative externalities.
C. has problems of adverse selection.
D. does not have important positive externalities.
Answer: D
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The distinction between sunk and incremental costs is most helpful in answering which question?
A) How many more people should be added to the production process? B) What is the correct price to charge? C) Should we begin to build a new factory? D) Should we continue developing a new software application that we began last year?
When poverty is defined by an relative real income level, what will happen to the poverty rate if the distribution of income is not perfectly equal?
A) The poverty rate will increase forever. B) The poverty rate will eventually be zero. C) The poverty rate will always remain constant. D) The poverty rate will change, but always exist.