Answer the following statement(s) true (T) or false (F)
1. When formulating an economic model, one must explicitly identify both an agent's objectives and his constraints.
2. Costs are forgone opportunities.
3. The first step in economic analysis is to choose an appropriate equilibrium condition.
4. An economic problem can be defined as any problem involving money.
5. Economists focus only on real world consumer choices.
1. True
2. True
3. False
4. False
5. False
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To determine whether an increase in the price of gasoline results in a consumer spending a larger share of their expenditure on gasoline we need to know
A) only how much money the consumer spends on gasoline before the price change B) only the change in the price of gasoline C) only the change in the price of gasoline as a percentage of the original price D) only the own price elasticity of demand for gasoline E) none of the above
According to the Keynesian consumption function, if disposable income
a. increases, planned saving will increase. b. increases, planned consumption will increase. c. falls, planned saving will increase. d. increases, both planned saving and planned consumption will increase.
A firm that incurs an emissions charge for polluting will install more pollution control equipment only if the:
a) Emissions charge exceeds the increased cost of installing the equipment. b) Emissions charge falls. c) Equipment will reduce pollution. d) Equipment cost is less than the marginal cost of production.
The increase in spending that occurs because the real value of money increases when the price level falls is known as the:
A. interest rate effect. B. international trade effect. C. price effect. D. wealth effect.