Lisa views pizzas and burritos as goods. If she prefers a bundle of four burritos and four pizzas to a bundle of four burritos and five pizzas, which property of consumer preference is violated? What change in the assumptions could lead a rational
consumer to prefer the first bundle?
The property of more-is-better is violated. However, if pizza is a bad, then a rational consumer would prefer the first bundle.
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The theory of efficient markets suggests that the steep decline the value of stocks traded on the NASDAQ was due to
a. a speculative bubble. b. a response to new information about firms' expected future profitability.. c. a natural cycle in technology stock prices evidenced by charts of previous prices trends. d. moral hazard.
Answer the following statement(s) true (T) or false (F)
1. An economic model is robust if it provides results that are testable and verifiable. 2. An easy, but not very insightful, possible explanation for apparently irrational behavior is that it is rational for a people with a taste for the behavior. 3. Most economic explanations can be reduced to the idea that human behavior is primarily a matter of taste. 4. Since economists assume that people act in their own self-interest, economic analysis does not apply to situations where people behave altruistically. 5. A model that is said to be robust is one that has many details and closely mimics reality.
Expansionary policies are government policies that
A) decrease aggregate supply. B) increase aggregate demand. C) decrease aggregate demand. D) increase aggregate supply.
The "stimulus package"
What will be an ideal response?