Q 1: When comparing the performance of economies in terms of the average well-be

Question

Q 1: When comparing the performance of economies in terms of the average well-being of their inhabitants, which measure is most appropriate?

Select one:

a. Real GDP

b. GDP per capita

c. Real GDP per capita

d. GDP

e. Base year GDP

Question 2

Based upon the analysis of changing the legal status of goods and services, we can conclude that if abortion were made illegal throughout the United States,

Select one:

a. the cost of abortion services would rise.

b. the quality of abortion services would fall and become less standardized.

c. the supply of abortion services would decrease.

d. the demand for abortion services would decrease.

e. all of the choices.

Question 3

Complete elimination of pollution is economically rational when

Select one:

a. pollution is associated with illness in humans.

b. for each unit of pollution, the cost of clean-up is less than the benefit from its elimination.

c. the pollution will likely affect future generations.

d. MSC of cleanup < MSB of cleanup.

e. none of the above; complete elimination is never rational.

Q 4: Which of the following measures the change in the hours of work that occurs when there is a change in income, other things equal?

Select one:

a. Marginal productivity

b. The supply of labor curve

c. The income effect

d. The wage effect

e. The substitution effect

Question 5

From an economic point of view, crime prevention activities should be expanded to the point at which

Select one:

a. their marginal social benefit no longer exceeds their marginal social cost.

b. all crime is stamped out.

c. all crimes against persons are eliminated.

d. their total gross benefits are maximum.

e. none of the choices.

Explanation / Answer

1. The answer is C- real GDP per capita, because it takes into account both purchasing power parity(real GDP) making it easier to compare the prices and Demand for products showing the standard of living of the people.

2.C- as Illegality makes it difficult for doctor's to help with abortion as they would also be liable to pay fines and may also face cancellation of license.

3.D- as the benefit of eliminating pollution should be more than its cost.

4.A- when income increases, Labour prefers more of leisure to work and hence their productivity decreases.

5.C- When all crimes are eliminated the cost is zero and the Marginalsocial beenfit is more.

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