Econ. Ch. 1

Economists use the word marginal to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when A. marginal benefit equals marginal cost. Your answer is correct.B. marginal benefit is greater than marginal cost. C. marginal benefit is maximized. D. marginal cost is zero.

A. marginal benefit equals marginal cost.

Consider an organization that exists to help the poor. The members of the organization are discussing alternative methods of aiding the​ poor, when a proponent of one particular method asserts​ that: ​"If only one poor person is helped with this​ method, then all our time and money would have been worth​ it." If you were a member of the​ organization, what reply best represents clear economic​ thinking? This attitude A. acknowledges the importance of considering all the alternatives. B. is the most logical because it is focussed on helping even one person. C. ignores the fact that the cost of helping that one person has an opportunity cost of what those funds could have been used for to help other people. Your answer is correct.D. recognizes the fact that since the organization is a​ charity, there is an opportunity cost based on the square root of other​ peoples' needs.

C. ignores the fact that the cost of helping that one person has an opportunity cost of what those funds could have been used for to help other people.

Canada has a market economy. As​ such, Canada​'s economy​ (relative to centrally planned​ economies) tends to result in A. allocative efficiency but not necessarily productive efficiency or equity. B. productive efficiency and allocative efficiency but not necessarily equity. Your answer is correct.C. equity but not necessarily productive efficiency or allocative efficiency. D. allocative efficiency and equity but not necessarily productive efficiency. E. productive efficiency but not necessarily allocative efficiency or equity.

B. productive efficiency and allocative efficiency but not necessarily equity.

Opportunity cost is A. when unlimited wants exceed the limited resources available to fulfill those wants. B. the highest valued alternative that must be given up to engage in an activity. Your answer is correct.C. the idea that because of​ scarcity, producing more of one good or service means producing less of another good or service. D. when consumers and firms use all available information as they act to achieve their goals.

B. the highest valued alternative that must be given up to engage in an activity.

Which of the following is not a step that economists use in developing a useful economic​ model? A. Decide on the assumptions to be used in developing the model. B. Formulate a testable hypothesis. C. Revise the model if it does not explain the data well. D. Make a value judgement about the merits of the hypothesis. Your answer is correct.E. Use economic data to test the hypothesis.

D. Make a value judgement about the merits of the hypothesis.

The three economic questions that every society must answer are A. What are the prices of​ goods, how are they​ determined, and who will pay for​ them? B. What kind of government will the society​ have, how will it be​ run, and who will run​ it? C. What economic system will be​ used, how will it be​ implemented, and who will make market​ decisions? D. What goods will be​ produced, how will they be​ produced, and who will receive the​ goods? Your answer is correct. Centrally planned economies allocate resources based on decisions by government ​, while market economies answer these questions through decisions made by households and firms .

D. What goods will be​ produced, how will they be​ produced, and who will receive the​ goods? government household firms

Economists assume that people are rational in the sense that A. they do not respond to economic incentives. B. they generally make the correct choices. C. they make decisions based on​ total, rather than​ marginal, variables. D. they use all available information as they take actions intended to achieve their goals.

D. they use all available information as they take actions intended to achieve their goals.

Societies organize their economies in two main ways to answer the three questions of​ what, how, and who. A society can have a centrally planned economy in which the government decides how economic resources will be allocated. Or a society can have a market economy in which the decisions of households and firms interacting in markets allocate economic resources.

centrally planned market

Efficiency means that goods are distributed in a way that maximizes benefits to society ​, while equity means that goods are distributed in a way that is fair .

maximizes benefits to society is fair

A mixed economy is an economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources.

mixed

Suppose an analyst evaluates whether it is a bad idea to pass family leave laws. This is an example of normative analysis .

normative

Positive analysis is concerned with what is​, and normative analysis is concerned with what ought to be. Economics is about positive analysis ​, which measures the costs and benefits of different courses of action.

positive normative positive

What type of economic analysis is concerned with the way things ought to​ be? A. Marginal Analysis B. Rational Behavior C. Normative Analysis Your answer is correct.D. Positive Analysis

C. Normative Analysis

Any model is based on making assumptions because A. models have to be simplified to be useful. B. we cannot analyze an economic issue unless we reduce its complexity. C. both a and b. Your answer is correct.D. neither a nor b.

C. both a and b.

Every society faces​ trade-offs because we live in a world of scarcity. Suppose a​ student-athlete has the opportunity to earn ​$600,000 next year playing for a minor league baseball​ team, ​$500,000 next year playing for a European professional football​ team, or​ $0 returning to college for another year. The opportunity cost of the​ student-athlete returning to college next year is ​$ 600000. ​(Enter your response as an​ integer.)

600000

Trade-offs force society to answer questions such as what goods and services will be​ produced, how will the goods and services be​ produced, and who will receive the goods and services produced. Which of the following countries has an economy where households and firms make these​ decisions? A. Japan Your answer is correct.B. Cuba C. North Korea D. The Soviet Union

A. Japan

Which of the following areas of economics studies issues such as ways to reduce teenage​ smoking? A. Microeconomics Your answer is correct.B. Macroeconomics C. Both microeconomics and macroeconomics give equal emphasis to these problems. D. This cannot be determined by the information given. Which of the following areas of economics studies issues such as whether government intervention is capable of reducing the severity of​ recessions? A. Microeconomics B. Macroeconomics Your answer is correct.C. Both microeconomics and macroeconomics give equal emphasis to these problems. D. This cannot be determined by the information given.

A. Microeconomics B. Macroeconomics

The economy of East Paragon has been experiencing deflation for the last few​ months, with prices of goods and services declining. Because firms are charging lower​ prices, they expected higher sales.​ However, consumption spending did not increase​ much, resulting in substantial losses for these firms. Which of the​ following, if​ true, explains why consumers did not increase consumption in spite of falling​ prices? A. Most people were expecting prices to decline further. Your answer is correct.B. The interest rate offered on bank deposits is low. C. The government lowered taxes on corporate profits earlier this year. D. The rate of unemployment in this country is lower than most other developing countries. E. The government recently announced plans to withdraw subsidies on petroleum products.

A. Most people were expecting prices to decline further.

The grading system plays an important role in student learning. In their book Effective​ Grading: A Tool for Learning and Assessment in College​, Barbara Walvoord and Virginia Anderson state that ​"grading infuses everything that happens in the​ classroom." They also argue that grading​ "needs to be acknowledged and managed from the first moment that an instructor begins planning a​ class." ​Source: Barbara E. Walvoord and Virginia Johnson​ Anderson, Effective​ Grading: A Tool for Learning and Assessment in​ College, 2nd​ edition, San​ Francisco: Jossey-Bass,​ 2010, p. 1. The grading system used by a teacher can affect the incentives of students to learn the course material by A. altering the payoffs to achieving success on the various components of the course. Your answer is correct.B. doubling the points assigned to each component of the course. C. uniformly weighting all course components. D. none of the above since student performance is based on innate intelligence. If teachers put too little weight in the grading scale on a certain part of the​ course, like readings outside the​ textbook, students might respond by de-emphasizing that part of the course. Teachers often wish that students came to class prepared having read the upcoming material. A teacher could design the grading system to motivate students to come to class prepared by increasing the grade weight assigned to being prepared.

A. altering the payoffs to achieving success on the various components of the course. de-emphasizing increasing

Relative to a market​ economy, a​ centrally-planned economy would be expected to be A. better at neither productive efficiency nor allocative efficiency because the absence of​ market-imposed competition negates the need of firms to satisfy consumer wants or produce using the​ lowest-cost methods. Your answer is correct.B. better at allocative efficiency but not productive efficiency because consumers can be forced to buy in government shops but firm managers can be wasteful because there is no profit motive. C. better at both productive efficiency and allocative efficiency because entrepreneurial greed​ doesn't exist there. D. better at productive efficiency but not allocative efficiency because costs can be controlled by the government but consumer tastes cannot.

A. better at neither productive efficiency nor allocative efficiency because the absence of​ market-imposed competition negates the need of firms to satisfy consumer wants or produce using the​ lowest-cost methods.

Scarcity implies that every society and every individual face​ trade-offs because scarcity means that A. human wants are greater than what available resources can produce. Your answer is correct.B. people refuse to limit their wants. C. government is unwilling to redistribute wealth. D. people are greedy and​ won't share with others. Centrally planned economies allocate resources based on decisions by government ​, while market economies answer these questions through decisions made by households and firms .

A. human wants are greater than what available resources can produce. government households and firms

Macroeconomics is the study of A. the economy as a​ whole, including topics such as​ inflation, unemployment, and economic growth. Your answer is correct.B. the economy on a​ state-by-state basis, covering areas affected by the Commerce Clause. C. why the U.S. has spent so much money on wars and government surveillance of its own citizens. D. how households and firms make​ choices, how they interact in​ markets, and how the government attempts to influence their choices. Microeconomics is the study of A. how households and firms make​ choices, how they interact in​ markets, and how the government attempts to influence their choices. Your answer is correct.B. how individuals and firms act altruistically to better society. C. how individuals make good decisions for themselves but hurt society. D. the economy as a​ whole, including topics such as​ inflation, unemployment, and economic growth. The level of total investment by firms in new machinery and equipment helps to determine how rapidly the economy grows. This is a macroeconomic issue. ​ However, to understand how much new machinery and equipment firms decide to​ purchase, one must analyze the incentives individual firms​ face, which is a microeconomic issue.

A. the economy as a​ whole, including topics such as​ inflation, unemployment, and economic growth. A. how households and firms make​ choices, how they interact in​ markets, and how the government attempts to influence their choices. macro micro

In a paper written by Bentley College economists Patricia M. Flynn and Michael A.​ Quinn, the authors​ state: ​"We find evidence that EconomicsLOADING... is a good choice of major for those aspiring to become a CEO​ [chief executive​ officer]. When adjusting for size of the pool of​ graduates, those with undergraduate degrees in Economics are shown to have had a greater likelihood of becoming an​ S&P 500 CEO than any other​ major." A list of famous economics majors published by Marietta College includes business leaders Warren​ Buffet, Donald​ Trump, Ted​ Turner, and Sam​ Walton, as well as former presidents George H.W.​ Bush, Gerald​ Ford, and Ronald Reagan. ​Sources: Patricia M. Flynn and Michael A.​ Quinn, "Economics: A Good Choice of Major for Future​ CEOs," Social Science Research Network​, November​ 28, 2006; and Famous Economics Majors​, Marietta​ College, Marietta​ Ohio, May​ 15, 2012. Why might studying economics be particularly good preparation for being the top manager of a corporation or a leader in​ government? A. Management and politics have more to do with public relations than economics. B. Economics teaches us how to look at the tradeoffs involved in every decision. Your answer is correct.C. Economics is just as valuable to a cashier as it is for a CEO. D. Economics is less of an issue as you climb the corporate ladder because you usually hire accountants to handle your money.

B. Economics teaches us how to look at the tradeoffs involved in every decision.

When does productive efficiency​ occur? A. Productive efficiency occurs when an economy achieves equity. B. Productive efficiency occurs when a good or service is produced at the lowest possible cost. Your answer is correct.C. Productive efficiency occurs when production is in accordance with consumer preferences. D. Productive efficiency occurs when an economy no longer relies on voluntary exchange. When does allocative efficiency​ occur? A. Allocative efficiency occurs when production is in accordance with consumer preferences. Your answer is correct.B. Allocative efficiency occurs when an economy no longer relies on voluntary exchange. C. Allocative efficiency occurs when an economy achieves equity. D. Allocative efficiency occurs when a good or service is produced at the lowest possible cost.

B. Productive efficiency occurs when a good or service is produced at the lowest possible cost. A. Allocative efficiency occurs when production is in accordance with consumer preferences.

Firms choose how to produce the goods and services they sell. In many​ cases, firms face a​ trade-off between using more workers or using more machines. For​ example, A. movie studios have to choose whether to produce animated films using more highly skilled animators to draw them by hand or fewer highly skilled animators and more​ low-skill animators. B. many times in the past several​ decades, firms may have chosen between a production method in the United States that uses fewer workers and more machines and a production method in China that uses more workers and fewer machines. Your answer is correct.C. many times in the past several​ decades, firms may have chosen between a production method in the United States that uses fewer machines and more workers and a production method in China that uses more machines and fewer workers. D. a local service station has to choose whether to provide car repair services using more diagnostic computers to support their auto mechanics and fewer tools to support their auto mechanics or more tools to support their auto mechanics and fewer diagnostic computers to support their auto mechanics.

B. many times in the past several​ decades, firms may have chosen between a production method in the United States that uses fewer workers and more machines and a production method in China that uses more workers and fewer machines.

Equity is A. an exactly equal distribution of income. B. the fair distribution of economic benefits. Your answer is correct.C. always achieved by the market. D. when poorer​ people's income is growing more rapidly than more wealthy​ people's income.

B. the fair distribution of economic benefits.

Economists use models A. to disprove economic data. B. to answer questions and analyze issues. Your answer is correct.C. to prove that theories are true. D. to describe the real world exactly. Economic data is used A. to take the place of an economic model. B. only if all relevant data is available. C. to test models. Your answer is correct.D. to prove that a model is true.

B. to answer questions and analyze issues. C. to test models.

Which of the following best describes​ scarcity? A. Wants cannot be fulfilled and thus all goods must be rationed. B. Unlimited wants exceed the limited resources available. Your answer is correct.C. Prices of goods are very high. D. Markets cannot properly allocate resources. Scarcity is central to the study of economics because it implies that A. wants are unlimited. B. every choice involves an opportunity cost. Your answer is correct.C. economic agents are rational. D. society must make decisions at the margin.

B. Unlimited wants exceed the limited resources available. B. every choice involves an opportunity cost.

According to the FBI Bank Crime​ Statistics, there were more than​ 4,000 bank robberies in the United States in​ 2015, an increase of 3.9 percent over 2014. The FBI claims that banks have made themselves easy targets by refusing to install clear acrylic​ partitions, called bandit barriers​, that separate bank tellers from the public. According to a special agent with the​ FBI, ​"Bandit barriers are a great deterrent.​ We've talked to guys who rob​ banks, and as soon as they see a bandit​ barrier, they go find another​ bank." ​Sources: U.S. Department of​ Justice, Federal Bureau of​ Investigation, "Bank Crime Statistics​ 2015," and​ "Bank Crime Statistics ​2014"​; and Richard​ Cowen, "FBI: Banks Are to Blame for Rise in​ Robberies," NorthJersey.com​, March​ 10, 2009. Despite this​ finding, many banks have been reluctant to install these barriers.​ Wouldn't banks have a strong incentive to install bandit barriers to deter​ robberies? Why,​ then, do so many banks not do​ so? A. Banks are not rational. B. Banks would not receive any benefits from installing the barriers. C. Banks have no economic incentive to install the barriers. Your answer is correct.D. Banks are not interested in the safety of their customers and employees. If teachers put too little weight in the grading scale on a certain part of the​ course, like readings outside the​ textbook, students might respond by de-emphasizing that part of the course. Teachers often wish that students came to class prepared having read the upcoming material. A teacher could design the grading system to motivate students to come to class prepared by increasing the grade weight assigned to being prepared.

C. Banks have no economic incentive to install the barriers.

Best​ Goods, one of the leading department store​ chains, offers goods at low prices. It recently opened many new stores across the country. After successfully setting up stores in most major​ cities, Best Goods faced substantial opposition in the city of​ Joberg, where lobbyists for smaller general stores​ (local businesses) opposed its entry. These lobbyists argued that Best Goods would put many local stores out of business and would also increase income inequality and unemployment in the city. Which of the​ following, if​ true, would weaken the stand of the​ lobbyists? A. The price level in the economy has been rising in the recent past. B. The country has a proportional tax​ structure, where the amount of tax paid is proportional to income earned. C. It is common for traditional retailers to modernize and successfully compete with organized retailing. Your answer is correct.D. The net impact on employment in Joberg is expected to be negative. E. Compared to most other cities in the​ country, the average income level of​ Joberg's population is higher.

C. It is common for traditional retailers to modernize and successfully compete with organized retailing.

Suppose economists develop an economic modelLOADING... and find that​ "it works great in​ theory, but it fails in​ practice." Which of the following should the economists do​ next? A. They should retest the current​ model, as there may have been an error in the testing methods the first time. B. They should leave the model as is. A model does not need to explain or predict real world events. C. They should revise the model in light of its failure to explain or predict real world events. Your answer is correct.D. None of the above.

C. They should revise the model in light of its failure to explain or predict real world events.

Productive efficiency means that A. every good or service is distributed fairly. B. every good or service is produced up to the point where marginal benefit is equal to marginal cost. C. a good or service is produced at the lowest possible cost. Your answer is correct.D. a good or service is produced as quickly as possible. Allocative efficiency means that A. a good or service is produced at the lowest possible cost. B. every good or service is produced up to the point where marginal benefit is equal to marginal cost. Your answer is correct.C. every good or service is distributed fairly. D. a good or service is produced as quickly as possible.

C. a good or service is produced at the lowest possible cost. B. every good or service is produced up to the point where marginal benefit is equal to marginal cost.

​Suppose, in an effort to prevent the population from​ declining, Italy begins offering new mothers extended periods of paid family leave from work​ and, consequently, the birthrate per woman increases. If​ so, then this could best be characterized as an example of people responding to A. religious beliefs. B. accounting principles. C. economic incentives. Your answer is correct.D. compassion. E. envy.

C. economic incentives.

When the federal government crafts environmental policies that make it less expensive for firms to follow green​ initiatives, A. the policies are likely to be more successful than policies that cost firms​ more, but they do not recognize economic incentives. B. the policies are futile because where the environment is​ concerned, it has been repeatedly shown that firms do not respond to economic incentives. C. the policies are consistent with economic incentives. Your answer is correct.D. pollution is likely to increase.

C. the policies are consistent with economic incentives.

Consumers, firms, and government ​decide(s) what goods and services will be produced.

Consumers, firms, and government

A primary difference between macroeconomics and microeconomics is A. There are no true differences between microeconomics and macroeconomics. B. Microeconomics is concerned with market economies while macroeconomics is concerned with​ centrally-planned economies. C. Microeconomics is concerned with present decisions while macroeconomics is concerned with future decisions. D. Microeconomics examines individual markets while macroeconomics examines the economy as a whole.

D. Microeconomics examines individual markets while macroeconomics examines the economy as a whole.

Economics is a social science because A. it is based on studying the actions of individuals. B. it considers human behaviorlong dashparticularly ​decision-making behavior. C. it applies the scientific method to the study of the interactions among individuals. D. all of the above.

D. all of the above.

​Trade-offs force society to make​ choices, particularly when answering the following three fundamental​ questions: A. ​One, what goods and services will be produced in foreign​ countries? Two, who will produce the goods and​ services? Three, who will receive the goods and services​ produced? B. ​One, what goods and services will be​ produced? Two, how will the goods and services be​ produced? Three, is the distribution of goods and services​ fair? C. ​One, what goods and services will be produced​ domestically? Two, how will the goods and services be​ produced? Three, is the distribution of goods and services​ fair? D. ​One, what goods and services will be​ produced? Two, how will the goods and services be​ produced? Three, who will receive the goods and services​ produced?

D. ​One, what goods and services will be​ produced? Two, how will the goods and services be​ produced? Three, who will receive the goods and services​ produced?

Many universities and corporations offer a health wellness program that helps their employees improve or maintain their health and get paid​ (a relatively small​ amount) for doing so. The programs​ vary, but typically consist of employees completing a health​ assessment, receiving a healthy living​ program, and monitoring their monthly health activities. Corporations and universities are willing to pay employees to take care of themselves because a healthier workforce A. performs more​ efficiently, thereby improving overall productivity in the workplace. B. translates into lower​ costs, in part by reducing​ illness-related absenteeism and premature retirements. C. is a happier workforce and thus less likely to become confrontational with management. D. all of the above. E. A and B only. Your answer is correct. The incentive of employees to improve or maintain their health once they obtain health insurance may be negatively impacted. When an employer offers a wellness program to its​ employees, the health insurance premiums the employer pays on behalf of the employees are likely to decrease .

E. A and B only. negatively decrease

The Apply the Concept feature explains that there are both positive and normative aspects to the debate over whether the federal government should enact tariffs on imports of cars from Mexico. What economic statistics would be most useful in evaluating the positive elements in this​ debate? Assuming that these statistics are available or could be​ gathered, are they likely to resolve the normative issues in this​ debate? Which of the following economic statistics would be useful in evaluating the positive elements in this​ debate? A. The size of the U.S.​ government's trade debt. B. The number of U.S. jobs in automobile manufacturing. C. Car prices in the U.S. D. Revenue the U.S. government could receive from the tariff. E. All of the above. Your answer is correct. Assuming that these statistics are available or could be​ gathered, are they likely to resolve the normative issues in this​ debate? A. ​Yes, the quantitative analysis of hard economic data leaves no unsettled questions. Subjective considerations cannot override objective analysis. B. ​No, because normative issues involve value judgments that incorporate an​ individual's full range of​ experiences, beliefs, and emotions.

E. All of the above. B. ​No, because normative issues involve value judgments that incorporate an​ individual's full range of​ experiences, beliefs, and emotions.

Best​ Goods, one of the leading department store​ chains, offers goods at low prices. It recently opened many new stores across the country. After successfully setting up stores in most major​ cities, Best Goods faced substantial opposition in the city of​ Joberg, where lobbyists for smaller general stores​ (local businesses) opposed its entry. These lobbyists argued that Best Goods would put many local stores out of business and would also increase income inequality and unemployment in the city. Which of the following can most reasonably be concluded from the information given in the​ question? A. Equity of income is the most important indicator of economic​ well-being. B. The government will provide tax benefits to the retail sector to fuel its growth. C. The purchasing power of the average consumer in Joberg is low. D. Lobbyists believe that income inequality can be reduced if Best Goods can be prevented from operating in Joberg. E. Lobbyists believe that those who lose jobs​ won't find alternative opportunities in the short term.

E. Lobbyists believe that those who lose jobs​ won't find alternative opportunities in the short term.

Suppose that your local police department recovers 100 tickets to a big NASCAR race in a drug raid. It decides to distribute these to residents and announces that tickets will be given away at 10 A.M. Monday morning at City Hall. Suppose that your college decides to give away​ 1,000 tickets to the football game against your​ school's biggest rival. The athletic department elects to distribute the tickets by giving them away to the first​ 1,000 students who show up at the​ department's office at 10 a.m. the following Monday. a. The groups of people that are most likely to get the tickets will be those for whom the expected marginal benefits of going to the​ department's office on Monday morning are greater than the expected marginal costs . b. What is the actual cost and also the opportunity cost of distributing the tickets this​ way? A. The cost of travel to the​ department's office. B. The activities that cannot be done​ (such as earning money at​ work) when one is standing in line. C. The cost of people blocking traffic in and around the​ department's office building. D. All of the above. Your answer is correct.E. A and B only. c. Productive efficiency occurs when a good or service​ (such as the distribution of​ tickets) is produced at the lowest possible cost. Is this an efficient way to distribute the​ tickets? No . d. This is A. an equitable way to distribute the tickets because the students who really want them will be able to go and get them. B. an equitable way to distribute the tickets because everyone has an equal chance of getting a ticket. C. not an equitable way to distribute the tickets because there may be enough tickets for faculty and staff. D. not an equitable way to distribute the tickets because some students who really want them may be unable to go and get them.

benfits costs D. All of the above. D. not an equitable way to distribute the tickets because some students who really want them may be unable to go and get them.

In the United​ States, who receives the goods and services produced depends largely on how income is distributed .

how income is distributed

Late in the​ semester, a friend tells​ you, ​"I was going to drop my psychology course so I could concentrate on my other​ courses, but I had already put so much time into the course I decided not to drop​ it." Is your​ friend's reasoning correct or​ incorrect? Your​ friend's reasoning is incorrect .

incorrect

Indicate whether each of the following is primarily a microeconomicLOADING... issue or a macroeconomicLOADING... issue. a. The effect of higher cigarette taxes on the quantity of cigarettes sold. This is a microeconomic issue. b. The effect of higher income taxes on the total amount of consumer spending. This is a macroeconomic issue. c. The reasons for the economies of East Asian countries growing faster than the economies of​ sub-Saharan African countries. This is a macroeconomic issue. d. The reasons for low rates of profit in the airline industry. This is a microeconomic issue

micro macro macro micro

Indicate which of the following statements represent positive analysisLOADING... and which represent normative analysisLOADING.... a. A​ 50-cent-per-pack tax on cigarettes will reduce smoking by teenagers by 12 percent. This represents positive analysis . b. The federal government should spend more on AIDS research. This represents normative analysis . c. Rising paper prices will increase textbook prices. This represents positive analysis . d. The price of coffee at Starbucks is too high. This represents normative analysis .

postive normative postive normative

Productive efficiency occurs when a good or service is produced at the lowest possible cost. Allocative efficiency occurs when production is in accordance with consumer preferences.

productive efficiency allocative efficiency

A large corporation that runs nursing homes estimates that changes to Medicare will result in lower payments by Medicare to nursing homes for​ short-term stays by patients that require therapy or care upon leaving hospitals. Assume the corporation is considering expanding the number of​ "beds" it offers at its nursing homes. Given the changes to​ Medicare, if the marginal benefit of offering an additional bed is ​$9 comma 000 and the marginal cost is ​$7 comma 000 per​ bed, then the corporation should offer additional beds.

should

Leonard​ Fleck, a philosophy professor at Michigan State​ University, has​ written, ​"When it comes to health care in​ America, we have limited resources for unlimited health care needs. We want everything contemporary medical technology can offer that will improve the length or quality of our lives as we age. But as presently healthy​ taxpayers, we want costs​ controlled." ​Source: Leonard​ Fleck, Just​ Caring: Health Care Rationing and Democratic Deliberation. New​ York: Oxford University​ Press, 2009. Is it necessary for all economic systems to limit services such as health​ care? Yes A market system prevents people from getting as many goods and services as they want due to which of the​ following? A. Their income. Your answer is correct.B. The government because it allocates the goods and services. C. Both A and B. D. Neither A nor B.

yes A. Their income.