When we say that an individual behaves according to "rational self-interest," we mean that this individual
A) is motivated by greed.
B) will always buy the most fashionable items available.
C) never considers the well being of any other individual.
D) is making choices that he or she believes will leave him or her better off.
Answer: D
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Government policies designed to change the distribution of income to one that is more equal involve taking from the rich and giving to the poor
a. True b. False Indicate whether the statement is true or false
In saying that the present system of floating exchange rates is managed, we mean that:
A. countries that allow their exchange rate to move freely will lose their borrowing privileges with the IMF. B. the value of any IMF member's currency can only vary 2 percent from its par value. C. IMF officials determine exchange rates on a day-to-day basis. D. the central banks of various countries sometimes buy and sell foreign exchange to alter undesirable trends in exchange rates.
The Pacific Pulp Company plans to clearcut 100 acres of land to produce paper pulp which would earn the firm $50,000 in profits. One hundred nearby homeowners realize that this would reduce the value of each of their properties by $1,000. These 100 homeowners
a. face a logistical problem of getting together to offer a bribe to Pacific Pulp. b. would not benefit from offering any side payment to Pacific Pulp not to clearcut. c. have no legal option except to suffer the damages to their property values. d. can costlessly organize to offer Pacific Pulp a side payment not to clearcut.
Figure 10-8
In the short run, the firm in Figure 10-8 will shut down if the price falls below
a.
$8.
b.
$6.
c.
$5.
d.
$1.