A firm will use land up to the point at which the MRP of land is equal to the price of land.
Answer the following statement true (T) or false (F)
True
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In his concept of “the invisible hand,” Adam Smith explains that
A. if each person looks out for himself or herself, then chaos will inevitably ensue. B. the pursuit of self-interest promotes economic well-being for society as a whole. C. governmental rule actually results in greater good than is apparent at the time. D. traditional religion is an appropriate guide for human behavior. E. All of the responses are correct.
When potential GDP increases, long-run aggregate supply also increases
Indicate whether the statement is true or false
An economist encounters some unexpected behavior in a market or laboratory setting. How can he or she distinguish between behavior resulting from mistakes by decision makers as opposed to being decisions based on unusual preferences?
a. If the same behavior is observed repeatedly even after opportunities to learn are provided, it is probably not a mistake. b. If the behavior is observed more often with inexperienced subjects, it is likely a mistake. c. Both a and b. d. It is impossible to distinguish between mistakes and unusual preferences empirically.
Marginal cost pricing regulations for a natural monopolist ensure that
a. b and e b. price reflects the value society places on the last unit produced c. output will continue to grow until the required subsidy is zero d. fair pricing schemes are more profitable e. subsidization will be necessary