If government chooses a policy that does not lead to a Pareto improvement, one may say that
A) this policy creates only winners.
B) this policy creates winners and losers.
C) only poor people benefit from this policy.
D) this policy only creates losers.
Question 2
Which of the following statements best explains why long-run average cost is never greater than short-run average cost?
A) In the long run, tangency of the isocost and isoquant is attainable. This is not necessarily true in the short run.
B) In the long run, diseconomies of scale might not occur, but in the short run diminishing marginal returns do.
C) In the long run, the cost of capital declines because the firm is able to pay down some of its debts.
D) In the long run, the average cost curve need not be U-shaped, but in the short run it is.
environmental policy
This graphic illustrates the original systems model of politics advanced by David Easton. Politics
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Government Corruption versus GDP per Capita, 2009