According to the text, standard economic models, based on self-interest where calculations appear to be made for every decision,
A. describe the motivations of people but fail as useful predictors of behavior.
B. are often criticized by other social sciences that use less formal modeling.
C. are accurate descriptions of human behavior and the motivations that drive it.
D. provide good predictions of behavior even if they don't describe what actually happens.
Answer: D
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At point A, 
A. MC = MR. B. The firm would do worst by shutting down. C. MC > MR. D. The firm is making positive economic profit.
According to Adam Smith, individuals are directed to do those things for which they have a comparative advantage by:
A. corporate management. B. the educational system. C. their self-interest. D. government policy.
Suppose a particular production process results in a large amount of pollution and the government decides to impose a tax to correct for this externality, such that the socially optimal output will be produced. The tax will have the effect of shifting the
A. marginal private benefit curve to the right. B. marginal social benefit curve to the right. C. marginal private cost curve to the left. D. marginal social cost curve to the left. E. marginal private cost curve to the right.
If a country runs a deficit in its current account, it is because
a. exports exceed imports b. imports exceed exports c. net unilateral transfers are negative d. foreign currency received from exports and transfers exceeds the foreign exchange needed to pay for imports and to make unilateral transfers e. foreign currency received from exports and transfers is less than the foreign exchange needed to pay for imports and to make unilateral transfers