Suppose a Chinese restaurant provides free tea to its customers. In the economic way of thinking, the restaurant is
A) engaging in predatory pricing of its meals.
B) engaging in predatory pricing of tea.
C) selling Chinese food below cost.
D) doing all of the above.
E) almost certainly doing none of the above.
E
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If the Fed sells a T-bill to an individual rather than to a commercial bank, how will this affect the money supply?
A. It will increase the money supply. B. It will increase the checking account balance of the individual. C. It will have no effect on the money supply. D. It will decrease the money supply.
When a union successfully raises the wages of its members, it will also
a. increase total productivity, which must rise in proportion to the wage rate. b. encourage employers to find a substitute for the union labor. c. raise the wages of nonunion workers. d. increase the share of income allocated to labor as opposed to capital.
Which of the following conditions must hold if a consumer is maximizing her utility?
A. MUX × PX = MUY × PY B. MUX = MUY C. MUX/PY = MUY/PX D. MUX/PX = MUY/PY
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.