A good economic theory:
a. includes every detail that affects the economic behavior of interest
b. relies on simplifying assumptions in order to explain economic behavior.
c. does not rely on simplifying assumptions.
d. is impossible to achieve because of the difficulty of conducting controlled experiments.
b
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All of the following are functions of the Federal Reserve System (the Fed) EXCEPT
A) supplying currency. B) lender of last resort for consumers. C) check clearing. D) regulation of the money supply.
________ is an example of a common pool resource
A) Food B) Water C) National defense D) Wi-Fi
Because there is no formal agreement among the participating firms, firms that engage in tacit collusion are exempt from prosecution under the anti-trust laws
Indicate whether the statement is true or false
Suppose a perfectly competitive firm's production function is q = L0.2K0.6 and it takes the wage and price as given. Then the firm's long-run demand for labor as a function of K, w, and p is
A) p5((0.2/w)2(0.6/r)3). B) p5((0.2/w)4(0.6/r)5). C) p5((0.2/w)5(0.6/r)4). D) p5((0.2/w)3(0.6/r)2).