1. Suppose that in the hypothetical country of Sore, coffee mugs are distributed based on government policy. This distribution rule gives the residents of Caffistan an incentive to spend time
a. earning money
b. loobying government officals
c. maintaining their place in line
2. People in the U.S. state of Iowa eat both corn and potatoes. It is technically possible for farmers to grow both corn and potatoes in Iowa, yet almost no farmers grow potatoes. Instead, every year, Iowa exports corn and imports potatoes from the U.S. state of Idaho, where farmers specialize in potatoes.
Which of the following principles of economic interaction best describes this scenario?
a. All costs are opportunity costs.
b. When markets do not achieve efficiency, government intervention can improve overall welfare.
c. There are gains from trade.
d. There is a tradeoff between equity and efficiency.