According to standard economic theory, rational individuals:
A. suffer from psychological failure.
B. never do what is in their own best interest.
C. always do what is in their own best interest.
D. do what is in their best interest only part of the time.
Answer: C
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If the price of a pizza increases and the demand curve for pizza does not shift, then the consumer surplus from pizza will ________
A) increase B) decrease C) equal the producer surplus if the market produces the efficient quantity of pizza D) remain the same
In a small economy in 2016, aggregate expenditure was $800 million while GDP that year was $850 million. Which of the following can explain the difference between aggregate expenditure and GDP that year?
A) Aggregate expenditure is always less than GDP in developed countries. B) Firm investment in inventories was greater than anticipated in 2016. C) Aggregate expenditure is always less than GDP in developing countries. D) Firm investment in inventories was less than anticipated in 2016.
A price increase for pizza will reduce the quantity of pizza demanded because it reduces a buyer's purchasing power. This is called :
a. income effect b. the alternative effect c. the substitution effect d. the normal good effect
If the smartphone market has only two firms, this market would be a
A. monopoly industry. B. monopolistically competitive industry. C. perfectly competitive industry. D. duopoly industry.