What is the difference between a hypothesis and a theory?
A hypothesis about behavior is the first step in developing and constructing a theory. A hypothesis is testable and makes a prediction about behavior in response to changed circumstances. If a hypothesis is shown to be consistent with real-world data, it can be tentatively accepted as an economic theory.
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In what ways can income redistribution be viewed as a public good?
What will be an ideal response?
In the Keynesian model with a fixed money wage but a flexible price level, an increase in taxes will lower
a. output and the price level, but leave the interest rate unchanged. b. output, the price level and the interest rate. c. output and the interest rate, but leave the price level unchanged. d. output and the price level, but increase the interest rate. e. the price level and the interest rate, but leave output unchanged.
The theory of monopolistic competition was developed in two separate models by
A) Adam Smith and David Ricardo. B) John Kenneth Galbraith and John Maynard Keynes. C) Edward Chamberlin and Joan Robinson. D) Roger Leroy Miller and Paul Samuelson.
In the long run, firms in a perfectly competitive market produce:
A. where average variable costs are minimized. B. at a quantity with positive economic profits. C. where price equals marginal cost. D. where MC is at its lowest point.