Which of the following is often referred to as the basic postulate of economics?
a. Individuals act only out of selfish motives.
b. Incentives matter; individuals respond in predictable ways to changes in personal costs and benefits.
c. The accuracy of the assumptions is the best test of an economic theory.
d. The value of a good is objective; it is equal to the cost of pro
b. Incentives matter; individuals respond in predictable ways to changes in personal costs and benefits.
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Which of the following areas of the world experienced virtually no change in its poverty rate from 1981 to 2010?
A. China B. South Asia C. India D. sub-Saharan Africa
A 2% wage increase for teachers or police officers is:
a. usually offset by higher output per worker. b. leads to increases in municipal budgets. c. indicates that teachers and police have became more selfish. d. leads to more personalized service.
In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue?
a. The price elasticity of demand is small, and the price elasticity of supply is large. b. The price elasticity of demand is large, and the price elasticity of supply is small. c. The price elasticity of demand and the price elasticity of supply are both small. d. The price elasticity of demand and the price elasticity of supply are both large.
Suppose product price is fixed at $24; MR = MC at Q = 200; AFC = $6; AVC = $16. What do you advise this firm to do?
A. Increase output. B. Decrease output. C. Stay at the current output; the firm is losing $200. D. Stay at the current output; the firm is earning a profit of $400.