One reason some manufacturing companies have moved production from overseas locations back to the United States is rising foreign labor costs. Assuming that managers at these companies used all available information, including the rising cost of foreign
labor, when making the decision to move production back to the United States exemplifies which key economic idea?
A) People are rational.
B) People respond to economic incentives.
C) Optimal decisions are made at the margin.
D) The market system relies on the principle of voluntary exchange.
Answer: A
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The existence of the tradeoff along the PPF means that the PPF is
A) bowed outward. B) linear. C) negatively sloped. D) positively sloped.
The demand curve for canned peas is downward sloping. If the price of canned peas, an inferior good, rises, then
A) the income effect which causes you to reduce your canned peas purchases is smaller than the substitution effect which causes you to increase your purchases, resulting in a net increase in quantity demanded. B) the income and substitution effects offset each other but the price effect of an inferior good leads you to buy more canned peas. C) both the income and substitution effects reinforce each other to decrease the quantity demanded. D) the income effect which causes you to increase your canned peas purchases is smaller than the substitution effect which causes you to reduce your purchases, resulting in a net decrease in quantity demanded.
Economic models
a. may be insufficient to make numerical predictions. b. may have untestable conclusions. c. both of these are true. d. neither of these are true.
Which of the books used at the FOMC meetings contain the Board staff's economic forecast for the next few years?
A. The Tealbook B. The Beigebook C. Both the Beigebook and Bluebook D. The Bluebook