Question

QUESTION 23

1. Economic theory identifies _______ as the main determinant of wage rates in competitive market economies.

   		worker productivity
   		whether or not labor unions exist
   		the level of greed of employers
   		the level of greed of workers
   		the level of generosity of employers

QUESTION 24

1. Kenneth Arrow proved that it is impossible ____.

   		for a country to have a comparative advantage in the production of everything.
   		for the marginal utility of a product to rise if consumers’ access to that product rises.
   		to come up with any procedure for voting that ensures that electoral outcomes reflect only the preferences of voters.
   		for economic growth to occur without the creation of capital goods.

QUESTION 25

1. Public-choice economists explain the fact that tariffs are commonplace by noting that

   		tariffs generally are good for the economy as a whole.
   		the benefits from tariffs are concentrated on a relatively small number of people while the costs of tariffs are spread out – dispersed – over a much larger number of people (“the special-interest-group effect”).
   		most people are stupid and incapable of learning.
   		foreigners often rig domestic elections.

QUESTION 26

1. True or false: Economic theory predicts that, with a policy of free trade, no job will ever be destroyed by imports.

   True

   False

Answer 1

Answer-23. Correct option is 'A'

Economic theory identifies worker productivity as the main determinant of wage rates in competitive market economies. Worker productivity refers to the amount of output produced per work hour.

Answer-24. Correct option is 'C'

Kenneth Arrow proved that it is impossible to come up with any procedure for voting that ensures that electoral outcomes reflect only the preferences of voters. Arrow's impossibility theorem, states that a clear order of preferences cannot be determined while adhering to mandatory principles of fair voting procedures.

Answer-25. Correct option is 'B'

Public-choice economists explain the fact that tariffs are commonplace by noting that the benefits from tariffs are concentrated on a relatively small number of people while the costs of tariffs are spread out – dispersed – over a much larger number of people (“the special-interest-group effect”). Public choice theory is that individuals in the political sphere behave rationally and in their own self-interest.

Answer-26. True

''Economic theory predicts that, with a policy of free trade, no job will ever be destroyed by imports'', this statement is True. Free trade drives economic growth, enhanced efficiency, increased innovation and the greater fairness that accompanies a rule-based system. These benefit increase as overall trade, export and import, increases. Free trade increases access to higher quality, lowered priced goods.