What is the best test of an economic theory?
a. the accuracy of the assumptions behind the theory
b. the ability of the theory to predict real-world events
c. the implications of the theory for current public policy
d. how much mathematical detail is behind the theory
B
You might also like to view...
If an industry is made up of five identical firms, the four-firm concentration ratio is
A) 5%. B) 20%. C) 80%. D) 100%.
Consider the following statements when answering this question I. It is impossible to shift taxes from producers to consumers without hurting the latter. II. Only polluters pay (through production taxes) for the environmental damage they cause
A) I and II are true. B) I is true, and II is false. C) I is false, and II is true. D) I and II are false.
A firm earning economic losses should operate in the short run as long as
A) the price per unit sold is greater than the average fixed cost per unit produced. B) the price per unit sold is greater than the average variable cost per unit produced. C) marginal revenue is at least the price per unit sold. D) the price per unit sold is equal to or greater than the marginal cost of production.
Suppose one county in Missouri decides it wants to reduce alcohol consumption, so the county passes a law that raises the price of a bottle of beer by $1 . As a result, people drive to other counties to drink alcohol, which results in an increase in drunk driving. This illustrates the principle that people respond to incentives
a. True b. False Indicate whether the statement is true or false