Chapter 1: Problem 2
What is scarcity? Why is scarcity central to the study of economics?
Chapter 1: Problem 2
What is scarcity? Why is scarcity central to the study of economics?
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Get started for freeWould you expect a centrally planned economy to be better at productive efficiency or allocative efficiency? Be sure to define productive efficiency and allocative efficiency in your answer.
What is the difference between productive efficiency and allocative efficiency?
Warren Buffett is the chief executive officer of the investment firm Berkshire Hathaway and one of the wealthiest people in the world. In an editorial in the Wall Street Journal, Buffett argued that economic policies in the United States should be designed so that people who are willing to work receive enough income to live a "decent lifestyle." He argued that an expansion of the Earned Income Tax Credit (EITC) would be superior to an increase in the minimum wage as a means to reach this goal. The EITC is a program under which the federal government makes payments to low-income workers. Is Buffett correct that it is the role of the federal government to make sure people who work will have enough income to live a "decent lifestyle"?
What is the difference between efficiency and equity? Why do government policymakers often face a trade-off between efficiency and equity?
Briefly explain which of the following statements represent positive analysis and which represent normative analysis. a. A 50-cent-per-pack tax on cigarettes will lead to a 12 percent reduction in smoking by teenagers. b. The federal government should spend more on AIDS research. c. Rising wheat prices will increase bread prices. d. The price of coffee at Starbucks is too high.
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