When forming theories, economists must be careful to
A. omit crucial factors.
B. limit the analysis to two variables.
C. mirror the real world as realistically but as simply as possible.
D. consider historical behavior and policies.
E. include all known facts and details.
Answer: C
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What was the Industrial Revolution? How did it contribute to modern economic growth?
What will be an ideal response?
Refer to Figure 16.1. A decrease in the real price of capital goods is best represented by a movement from
A) point A to point B. B) point B to point A. C) point A to point C. D) point C to point A.
The economic system that is generally considered to be the most efficient at answering the What to produce and the How to produce questions is the:
A. market economy. B. command economy C. soviet economy. D. traditional economy.
The total cost of the firm
A) includes explicit costs but excludes implicit costs. B) includes implicit costs but excludes explicit costs. C) includes implicit and explicit costs. D) includes implicit and explicit costs but excludes a normal rate of return on investment.