A model (or theory):
a. is a general statement about the causal relationship between variables based on facts.
b. helps explain and predict the relationship between variables.
c. when expressed as a downward (negatively) sloping graph implies an inverse relationship between the variables.
d. all of these.
d
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Normative analysis involves value judgments
Indicate whether the statement is true or false
When an economy is operating efficiently, which is TRUE?
A) All resources are fully employed. B) It would be possible to increase the output of 1 good without decreasing the output of the other. C) Resources are not fully employed or current technology is not being fully utilized. D) This economy is operating to the right of its production possibilities curve (PPC).
Developing countries do:
A. compete with one another for foreign investment, and this competition reduces the benefits from foreign investment. B. not compete with one another for foreign investment, because they have sufficient domestic saving to finance their investment needs. C. not compete with one another for foreign investment, because they lack the infrastructure to attract it in the first place. D. compete with one another for foreign investment, but this competition is beneficial to developing countries because it insures a more efficient allocation of resources.
Assume the watermelon industry is perfectly competitive and in long-run equilibrium with a market price of $10. If the demand for watermelons increases in this decreasing-cost industry, long-run equilibrium will be reestablished at a price
A. equal to $10. B. greater than $10. C. less than $10. D. either greater than or less than $10, depending on the number of firms that enter the industry.