Which of the following is NOT an assumption of the classical model?
A. Pure competition exists.
B. Wages and prices are flexible.
C. Inflation will lead to money illusion.
D. People are motivated by self-interest.
Answer: C
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If a household has a single woman and three kids, has a standard deduction of $6,300, has itemized deductions of $10,650, and personal exemptions of $12,000 (3*$4,000), then the first ________ of income is federal income tax free.
A. $18,300 B. $22,650 C. $16,850 D. $28,950
Soo Jin shares a one-bedroom apartment with her classmate. Her share of the rent is $700 per month. She is considering moving to a studio apartment which she will not have to share with anyone. The studio apartment rents for $950 per month. Recently, you
ran into Soo Jin on campus and she tells you that she has moved into the studio apartment. Soo Jin is as rational as any other person. As an economics student, you rightly conclude that A) Soo Jin did not have a choice; her roommate was a slob. B) Soo Jin figures that the additional benefit of having her own place (as opposed to sharing) is at least $250. C) Soo Jin figures that the additional benefit of having her own place (as opposed to sharing) is at least $950. D) the cost of having one's own space outweighs the benefits.
If a negative externality exists, __________ in order for the socially optimal output to be reached.
A. supply needs to increase B. supply needs to decrease C. demand needs to increase D. b and c E. none of the above
Scarcity implies that
A) the satisfaction of one person's want means another person's want can also be satisfied. B) the satisfaction of one person's want means another person will be more than satisfied. C) the satisfaction of one person's want means another person's want cannot be satisfied. D) no person's wants can be satisfied.