Answer the following statement(s) true (T) or false (F)
1. Unlike a consumer, a competitive profit-maximizing firm faces no constraints.
2. Optimization typically requires use of the equimarginal principle.
3. A world in which most people are irrational would have to function much differently than a world in which most people are rational.
4. An economist uses a consumer's demand curve to express the solutions to a family of optimization problems.
5. Economic models of markets generally treat prices as exogenous variables.
1. False
2. True
3. False
4. True
5. False
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If policymakers attempt to offset an adverse inflation shock with monetary ________, the resulting long-run equilibrium will be at ________ inflation rate compared to allowing the self-correcting mechanism return the economy to potential output.
A. easing; a lower B. tightening; a lower C. tightening; a higher D. easing; a higher
When nations attempt to move quickly from central planning to a market system, they face the obstacle of high transaction costs in large part because
A) market systems are unnatural and require careful design. B) people who have lived under socialism lack the basic skills a market system requires. C) people who have long lived under socialism are not sufficiently individualistic. D) the experience of socialism makes people distrustful of one another. E) they lack many of the institutions that develop over time in a market system.
In the aggregate expenditures model, if aggregate expenditures (AE) equals $7 trillion and GDP equals $8 trillion, then inventory accumulation equals $1 trillion
a. True b. False Indicate whether the statement is true or false
A unique resource can serve as
A) an economic profit B) a sunk cost C) an entry barrier D) none of these choices