a. a tradeoff because of reduced incomes to the firms' owners and workers.
b. a tradeoff only if some firms are forced to close.
c. no tradeoff, since the cost of reducing pollution falls only on the firms affected by the requirements.
d. no tradeoff, since everyone benefits from reduced pollution.
ANSWER: a
14. Efficiency means that
a. society is conserving resources in order to save them for the future.
b. society's goods and services are distributed equally among society's members.
c. society's goods and services are distributed fairly, though not necessarily equally, among society's members.
d. society is getting the most it can from its scarce resources.
ANSWER: d
15. The property of society getting the most it can from its scarce resources is called
a. efficiency.
b. equality.
c. externality.
d. productivity.
ANSWER: a
16. Efficiency
a. and equality both refer to how much a society can produce with its resources.
b. and equality both refer to how fairly the benefits from using resources are distributed between members of a society.
c. refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society.
d. refers to how evenly the benefits from using resources are distributed between members of society. Equality refers to how much a society can produce with its resources.
ANSWER: c
17. The terms equality and efficiency are similar in that they both refer to benefits to society. However, they are different in that
a. equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources.
b. equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits.
c. equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits.
d. equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs.
ANSWER: a
18. When society gets the most it can from its scarce resources, then the outcome is called
a. equitable.
b. efficient.
c. normal.
d. marginal.
ANSWER: b
19. A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. However, redistributing income from rich to poor reduces the reward for working hard. Therefore, society faces a tradeoff between
a. guns and butter.
b. efficiency and equality.
c. inflation and unemployment.
d. work and leisure.
ANSWER: b
20. Which of the following is true?
a. Efficiency refers to the size of the economic pie; equality refers to how the pie is divided.
b. Government policies usually improve upon both equality and efficiency.
c. As long as the economic pie continually gets larger, no one will have to go hungry.
d. Efficiency and equality can both be achieved if the economic pie is cut into equal pieces.
ANSWER: a
21. When the government redistributes income from the wealthy to the poor,
a. efficiency is improved, but equality is not.
b. both wealthy people and poor people benefit directly.
c. people work less and produce fewer goods and services.
d. the government collects more revenue in total.
ANSWER: c
22. When the government implements programs such as progressive income tax rates, which of the following is likely to occur?
a. Equality is increased and efficiency is increased.
b. Equality is increased and efficiency is decreased.
c. Equality is decreased and efficiency is increased.
d. Equality is decreased and efficiency is decreased.
ANSWER: b
23. Senator Fujita argues that replacing the federal income tax with a national sales tax would increase the level of output. Senator Watson objects that this policy would benefit the rich at the expense of the poor.