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Hi All,
Please help me in the following questions :
1.If a non-rival good that is costly to produce is produced profitably by the private sector , then its price is :
a. must exceed the marginal social cost (msc) of additional usage.
b.must equal the msc of additional usage.
c.must be lower than the msc of additional usage.
d. satisfies none of the above relationships .
2.In the Ricardian model of international trade , if country A has comparative advantage in commodity X , and country B has comp. adv. in commodity Y , which of the following outcomes is NOT possible under free trade :
a. Both countries produce both goods.
b. A produces both X and Y , B produces Y.
c. A produces X , B produces both X and Y.
d. A produces X , B produces Y .
3.A non-rival but excludable good is sought to be produced in a two person society . Each person has a demand curve of P = 1 - q for the good , where P is price and q is quantity demanded .
The good can be produced at a constatnt per unti cost of 1/2 . The socially optimal quantity of the good is
a. 1
b. 3/4
c. 1/2
d. 3/2
4. Which is FALSE :
a. Purchase of New Homes are included in the investment component of GDP.
b. GDP measures the value fo sales of goods and services during a year.
c.GDP measures new production only .
d. Any change in business inventories is included in the investment component of GDP.
5. Which is FALSE :
a. The difference between gross and net investment is depreciation
b. GDP = C + I + G + NX , the 'I' refers to Net Investment.
c. Depreciation is part of GDP that does nto flow to households.
d.Households earn income by contributing factor inputs to the production of consumer and capital goods.
Thanks.
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