Assume that the farmers know that their revenues would increase if each would take a certain amount of acreage out of production. An agreement to do so
A) would not be made because the farmers have no incentive to enter into it.
B) would not be made because it would contradict the assumption that farmers are profit maximizers.
C) probably would not be adhered to, if made, because it would be disadvantageous for the farmers as a group.
D) probably would not last, if made, because each farmer would have an incentive to break it.
D
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In the ISLM framework, a declining price level causes
A) interest rates to rise. B) income to fall. C) saving to rise. D) the LM curve to shift to the right.
Expenses that a firm does not have to pay out of pocket are
A) wages of employees. B) taxes. C) implicit costs. D) explicit costs.
Experiments:
A. make it easier to determine whether people's choices are consistent with standard economic theory, but can make it harder to establish causality. B. often make it easier to establish causality, but can make it harder to determine whether people's choices are consistent with standard economic theory. C. make it easier both to establish causality and to determine whether people's choices are consistent with standard economic theory. D. make it harder both to establish causality and to determine whether people's choices are consistent with standard economic theory.
It is inflationary for government to increase spending if:
a. it also cuts taxes. b. the aggregate supply curve is flat. c. the economy is at full employment. d. equilibrium real GDP is well below full employment.