31) A normal profit is defined as A) total revenue minus explicit costs. B) the same thing as accounting profit. C) the return to entrepreneurship. D) total revenue minus implicit costs. E) the economic profit minus the implicit costs. 32) Normal profit is A) part of the firm’s opportunity costs. B) the same as economic profits. C) part of the firm’s explicit costs. […]
21) Demand curves slope ________ because as the price increases and other things remain the same, the quantity demanded ________. A) downward; decreases B) downward; increases C) upward; decreases D) upward; increases E) downward; does not change 22) The market demand curve A) cannot show how quantity demanded changes in response to a change in price. B) cannot show a change in demand for […]
21.Inclassactionlawsuitsinterestedpartiestothelawsuitarenotrequiredtopayattorneyfeesdirectly.Thisisanexampleofanattemptto a.maximizeattorneyfees. b.reducetheincentiveofattorneystofileclassactionlawsuits. c.reducethetransactioncostsoffindingaprivatesolutiontoanexternality. d.regulateattorneyfees. 22.Deelovestolandscapeheryard,butherneighborMarvinplacesalowvalueonhislandscaping.WhenMarvin’sgrassisneglectedandgetslong,DeewillmowitforMarvin.Thisisanexampleof a.asituationinwhichtheCoasetheoremfailstoexplainthelawnmowingarrangement. b.animproperallocationofresources. c.aprivatesolutiontoanegativeexternalityproblem. d.anexploitationofacommonresource. 23.TheCoasetheoremsuggeststhatprivatesolutionstoanexternalityproblem a.areeffectiveunderallconditions. b.willusuallyallocateresourcesefficientlyifprivatepartiescanbargainwithoutcost. c.areonlyefficientwhentherearenegativeexternalities. d.maynotbepossiblebecauseofthedistributionofpropertyrights. 24.InwhichofthefollowingcasesistheCoasetheoremmostlikelytosolvetheexternality? a.Edisallergictohisroommate’scat. b.ChemicalsfrommanufacturingplantsintheMidwestarecausingacidraininCanada. c.Pollutedwaterrunofffromfarmsismakingresidentsofanearbytownsick. d.Industrializationaroundtheworldiscausingglobalwarming. 25.AccordingtotheCoasetheorem,privatepartiescansolvetheproblemofexternalitiesif a.thecostofbargainingissmall. b.theinitialdistributionoflegalrightsfavorsthepersonbeingadverselyaffectedbytheexternality. c.thenumberofpartiesinvolvedissufficientlylarge. d.Alloftheabovearecorrect. 26.AccordingtotheCoasetheorem,privatemarketswillsolveexternalityproblemsandallocateresourcesefficientlyaslongas a.theexternalitiesthatarepresentarepositive,notnegative. b.governmentassignspropertyrightstotheharmedparty. c.privatepartiescanbargainwithsufficientlylowtransactioncosts. d.businessesdetermineanappropriatelevelofproduction. 27.TheCoasetheoremstatesthat a.undercertaincircumstancesgovernmentinterventionisnotneededtoreachefficientoutcomeswhenanexternalityispresent. b.governmentinterventionisalwaysrequiredtoreachanefficientoutcomewhenanexternalityispresent. c.governmentinterventioncannotleadtoanefficientoutcomewhenanexternalityispresent. d.onlynegativeexternalitiescanberesolvedusinggovernmentintervention. 28.WhichofthefollowingisnotanecessaryconditionfortheCoasetheorem? a.Propertyrightsareclearlydefined. b.Therearenobargainingcosts. c.Thegovernmentintervenestointernalizetheexternality. d.Thereareonlyafewpartiesinvolved. 29.InmanycasestheCoasetheoremdoesnotworkwellbecause a.therearetoofewpartiesatthenegotiationtable. b.thegovernmentdoesnotknowabouttheCoasetheorem. c.transactioncostsaretoohigh. d.transactioncostsaretoolow. 30.Whycan’tprivateindividualsalwaysinternalizeanexternalitywithoutthehelpofgovernment? a.Legalrestrictionspreventsidepaymentsbetweenindividuals. b.Transactionscostsmaybetoohigh. c.Sidepaymentsbetweenindividualsareinefficient. d.Sidepaymentsbetweenindividualsareinsufficient.
111) Aggregate demand (AD) shocks have a smaller effect on real GDP and a larger effect on the price level A) the steeper the AS curve. B) on the downward-sloping portion of the AS curve. C) the flatter the AS curve. D) on the upward-sloping portion of the AS curve. E) if the AD curve is flatter. Answer: A Diff: 2 Topic: 23.3b. […]
116.Gannon Company had the following information at December 31: Finished goods inventory, January 1$ 50,000 Finished goods inventory, December 31150,000 If the cost of goods manufactured during the year amounted to $2,100,000 and annual sales were $2,750,000, the amount of gross profit for the year is a.$650,000. b.$2,000,000. c.$750,000. d.$550,000. 117.Haight Company incurred direct materials costs of $1,500,000 during the year. Manu-facturing overhead […]
22) Price fixing A) always is a violation of the law. B) is allowed only if otherwise a firm would go bankrupt. C) is one of the business practices prohibited by the Clayton Act. D) is a violation of the law only when it is combined with predatory pricing. E) is legal if the businesses have received prior clearance from the Justice Department. 23) […]
21) A marginal cost pricing rule sets marginal cost equal to A) minimum average variable cost. B) price. C) average cost. D) marginal revenue. E) the smaller of price or marginal revenue. 22) For a regulated natural monopoly, the marginal cost pricing rule is a rule that sets price ________ marginal cost and achieves an ________ amount of output. A) equal to; efficient […]
41) Consider the long-run theory of investment, saving, and growth. For a given level of private saving, an increase in government purchases will likely ________ the economy’s long-run growth rate. A) slow down B) accelerate C) not affect D) increase E) Not enough information to know 42) For a given level of national income, an increase in private consumption or government purchases will cause […]
11) Social Security is a ________ program paid for by ________. A) compulsory; payroll taxes B) compulsory; government money C) voluntary; payroll taxes D) voluntary; income taxes E) compulsory; voluntary taxes on income 12) Social Security and unemployment compensation A) are paid only to the poorest households. B) are both funded by income taxes. C) are distributed by individual states. D) both redistribute […]
41.Theideathatexpansionaryfiscalpolicyhasapositiveaffectoninvestmentisknownas a.monetarypolicy. b.crowdingout. c.theinvestmentaccelerator. d.themultiplier. 42.Thegovernmentbuysnewweaponssystems.Themanufacturersofweaponspaytheiremployees.Theemployeesspendthismoneyongoodsandservices.Thefirmsfromwhichtheemployeesbuythegoodsandservicespaytheiremployees.Thissequenceofeventsillustrates a.theacceleratoreffect. b.themultipliereffect. c.thechaineffect. d.thebandwagoneffect. 43.Whichofthefollowingillustrateshowtheinvestmentacceleratorworks? a.AnincreaseingovernmentexpendituresincreasestheinterestratesothattheBurgervillechainofrestaurantsdecidestobuildfewernewrestaurants. b.AnincreaseingovernmentexpendituresincreasesaggregatespendingsothatBurgervillefindsitprofitabletobuildmorenewrestaurants. c.AnincreaseingovernmentexpendituresincreasestheinterestratesothatthedemandforstocksandbondsissuedbyBurgervilleincreases. d.AnincreaseingovernmentexpendituresdecreasestheinterestratesothatBurgervilledecidestobuildmorenewrestaurants. 44.Whichofthefollowingillustrateshowtheinvestmentacceleratorworks? a.AnincreaseingovernmentexpendituresincreasesaggregatespendingsothatSnoozeBargainCo.decidestomodernizeitsmotels. b.AnincreaseingovernmentexpendituresincreasestheinterestratesothatSnoozeBargainCo.decidestomodernizeitsmotels. c.AnincreaseingovernmentexpendituresincreasestheinterestratesothatthedemandforstocksandbondsissuedbySnoozeBargainCo.rises. d.AnincreaseingovernmentexpendituresdecreasestheinterestratesothatSnoozeBargainCo.decidestomodernizeitsmotels. 45.Thepositivefeedbackfromaggregatedemandtoinvestmentiscalled a.theinvestmentmultiplier. b.thecrowding-outeffect. c.theinvestmentaccelerator. d.thecrowding-inmultiplier. 46.Theprocessoftheinvestmentacceleratorinvolves a.positivefeedbackfromaggregatedemandtoinvestment. b.negativefeedbackfromaggregatedemandtoinvestment. c.positivefeedbackfromaggregatesupplytoinvestment. d.negativefeedbackfromaggregatesupplytoinvestment. 47.Thechangeinaggregatedemandthatresultsfromfiscalexpansionchangingtheinterestrateiscalledthe a.multipliereffect. b.crowding-outeffect. c.acceleratoreffect. d.Ricardianequivalenceeffect. 48.Whichofthefollowingcorrectlyexplainsthecrowding-outeffect? a.Anincreaseingovernmentexpendituresdecreasestheinterestrateandsoincreasesinvestmentspending. b.Anincreaseingovernmentexpendituresincreasestheinterestrateandsoreducesinvestmentspending. c.Adecreaseingovernmentexpendituresincreasestheinterestrateandsoincreasesinvestmentspending. d.Adecreaseingovernmentexpendituresdecreasestheinterestrateandsoreducesinvestmentspending. 49.Thetermcrowding-outeffectrefersto a.thereductioninaggregatesupplythatresultswhenamonetaryexpansioncausestheinterestratetodecrease. b.thereductioninaggregatedemandthatresultswhenamonetaryexpansioncausestheinterestratetodecrease. c.thereductioninaggregatedemandthatresultswhenafiscalexpansioncausestheinterestratetoincrease. d.thereductioninaggregatedemandthatresultswhenadecreaseingovernmentspendingoranincreaseintaxescausestheinterestratetoincrease. 50.Whichofthefollowingisanexampleofcrowdingout? a.Anincreaseingovernmentspendingincreasesinterestrates,causinginvestmenttofall. b.Adecreaseinprivatesavingsincreasesinterestrates,causinginvestmenttofall. c.Adecreaseinthemoneysupplyincreasesinterestrates,causinginvestmenttofall. d.Anincreaseintaxesincreasesinterestrates,causinginvestmenttofall.
The Department of Homeland Security
The Department of Homeland Security offered a unique insight into how this cabinet level agency viewed the issue.
The 2014 Quadrennial Homeland Security Review (QHSR) was the document to offer this perspective.
The QHSR is an important foundational document in this discussion as it established multiple resilience goals and
objectives in the areas of critical infrastructure, supply chain systems, and cyber. The resilience of all of these areas,
and other sectors covered by the QHSR is a national imperative. Recent threat activities in the cyber sphere
underscores this need. From OPM, and Home Depot, to EQUIFAX and even the Department of Homeland Security itself
have suffered breaches.
DHS specifically noted in the Quadrennial Homeland Security Review (QHSR):
This second quadrennial review reflects a more focused, collaborative Departmental strategy, planning, and
analytic capability. The risk-informed priorities set forth in this Review will drive operational planning, as well as
analysis of resource and capability options and tradeoffs over the next four years. The Review also recognizes the
responsibility the Department shares with hundreds of thousands of people across the federal, state, local, tribal,
and territorial governments, the private sector, and other nongovernmental organizations, and provides a path
forward for engaging in public-private partnerships. These are the people who regularly interact with the public,
who are responsible for public safety and security, which own and operate our nation’s critical infrastructure and
services, who perform research and develop technology, and who keep watch, prepare for, and respond to
emerging threats and disasters.
It should come as no surprise that one of the five QHSR missions is devoted to resilience: Mission 5 – Strengthening
National Preparedness and Resilience. It should be noted the Congressionally mandated 2018 QHSR was never
released.
But there are even more agencies, within the Department of Homeland Security such as the Federal Emergency
Management Agency, (FEMA) which released the country's first-ever National Preparedness Goal in 2011. Again,
another foundational document dealing with resilience.
(Image: https://www.cisa.gov/)
The creation, in 2018, of the DHS Cybersecurity and Infrastructure Security Agency (CISA) assed to the national
resilience effort. According to that agency’s web site:
We coordinate security and resilience efforts using trusted partnerships across the private and public sectors and
deliver technical assistance and assessments to federal stakeholders as well as to infrastructure owners and operators
nationwide. CISA (n.d.) also delivers insights on these assessments related to current capabilities to identify gaps,
which—along with an examination of emerging technologies—help determine the demand for future capabilities (both
near- and long-term).
CISA has developed Sector Coordinating Councils (SCC) that are, “self-organized and self-governed councils that
enable critical infrastructure owners and operators, their trade associations, and other industry representatives to
interact on a wide range of sector-specific strategies, policies, and activities. The SCCs coordinate and collaborate with
sector-specific agencies (SSAs) and related Government Coordinating Councils (GCCs) to address the entire range of
critical infrastructure security and resilience policies and efforts for that sector.”
Finally, perhaps the document that is most talked about regarding resilience is President Policy Directives-8 or PDD-8.
Within this PDD a vision is presented for nationwide preparedness and identifies the core capabilities and targets
necessary to achieve preparedness across the following five mission areas: prevention, protection, mitigation,
response and recovery. Recognizing that preparedness is a shared responsibility, Presidential Policy Directive / PPD-8:
National Preparedness was signed by the President on March 30, 2011.
At its core, PPD-8 requires the involvement of everyone—not just the government—in a systematic effort to keep the
nation safe from harm and resilient when struck by hazards, such as natural disasters, acts of terrorism and
pandemics. When you think about it in the purest sense, isn’t that what resilience as an element of Homeland Security
really is?
One other Homeland Security resilience issue that has received a lot of focus from DHS’ Office of Academic
Engagement or OAE is the new Campus Resilience program. Released in April of 2018 this program which was based
on TableTop Exercises (TTX). This effort is driven by active shooter type events.
This policy directive calls on federal departments and agencies to work with the whole community to develop a
national preparedness goal and a series of frameworks and plans related to reaching the goal.
To help resilience get the kind of academic focus that it should the Department of Homeland Security Science and
Technology Directorate Office of University programs has established two academic centers of excellence. One is at the
University of North Carolina (Chapel Hill) – Coastal Resilience Center or CRC and one at the University of Illinois
Champaign-Urbana – the Critical Infrastructure Resilience Institute or CIRI. To get an understand of the research that
has done please visit these links:
https://coastalresiliencecenter.unc.edu/
https://ciri.illinois.edu/
Finally, to get a real sense of where the issue of Homeland Security and resilience stands entering 2021 listen to the
speech by Dr. Stephen Flynn, the Founding Director of the Global Resilience Institute at Northeastern University, and
one of America’s true experts on resilience. The link for this closed caption “Skype speech” from the 2020 Maritime
Risk Symposium provides Dr. Flynn’s perspective on maritime resilience in the face of growing human-made and
naturally occurring turbulence.
As you consider this issue keep in mind that the new Administration has issued Interim National Security Strategic
Guidance. Noted the Congressional Research Service:
In drafting national security strategies, every administration faces central questions about how the U.S.
government should define and advance national security. The Biden Administration argues that the COVID-19
pandemic and other systemic issues, including (but not limited to) climate change and the rise of anti-democratic
authoritarian populism, are forcing the United States to take an expansive view of what constitutes matters of
national security. In so doing, the INSSG articulates some continuity with the Trump Administration in identifying
the challenge that strategic competition with China poses to U.S. national security. (Congressional Research
Service)
What will be the impact on national resilience with this framework for the National Security Strategy? This is what the
Congressional Research Service noted:
How might Interagency Resources be Rebalanced? Since 2001, the Department of Defense (DOD) and U.S.
military have taken on missions beyond traditional warfighting responsibilities (including, but not limited to,
providing more security assistance and assisting with international disease responses). The State Department,
the U.S. Agency for International Development (USAID), the U.S. Trade Representative, and other agencies
provide critical national security capabilities, but possess narrower authorities and command fewer budgetary and
personnel resources.
How does national resilience get impacted or does it? Is there a direct connection between the NSS and national
resilience?
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