Propositions that are logically true based on the assumptions of a model are known as:
A. insights.
B. theorems.
C. precepts.
D. policies.
Answer: B
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The economic way of thinking indicates that government action will
a. never improve on the allocation of resources through markets. b. always improve on the results of markets if the political process is democratic. c. reflect the actions of political decision-makers seeking to advance the public interest, rather than their own personal interests. d. can either improve the well-being of the general public, or harm it, depending on the circumstances.
If firms in a monopolistically competitive market are incurring economic losses, which of the following statements describes the changes that occur as the market adjusts to the long-run equilibrium?
a. Each existing firm's demand curve shifts to the right. b. More firms exit the market. c. Each firm eliminates its excess capacity. d. Both a and b are correct.
Price-matching strategies may fail to enhance profits when:
A. firms cannot prevent customers from making deceptive claims or firms have different marginal costs. B. firms cannot prevent customers from making deceptive claims. C. firms have different marginal costs. D. None of the statements are correct.
Collusion:
A. rarely occurs in reality. B. is a common problem in reality. C. has not occurred in the last hundred years or so, due to government policy outlawing it. D. never occurs in reality.