Consider an economic model designed to analyze the behavior of business firms. An assumption that the goal of the firms is to maximize profit would be
a. a simplifying assumption
b. a critical assumption
c. an abstraction from reality
d. an unnecessary detail
e. irrelevant to the conclusions of the model
B
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When the price of a sweet roll is $2, the bakery sells 300 rolls per week. If it raises the price to $3, then it sells 150 rolls per week. Based on this, the price elasticity of a sweet roll between these prices is
A. 0.40. B. 1 C. 1.67. D. 0.67.
Which is true of total federal spending relative to GDP?
a. It is the most commonly used measure of the size of government. b. There really is no upper limit to the ratio of total government spending to GDP. c. It has steadily increased over the last 50 years. d. All of the above are correct. e. Only a and c are correct.
Each point along a nation's production possibilities frontier represents efficient use of all resources
a. True b. False
When the government redistributes income from the wealthy to the poor,
a. efficiency is improved, but equality is not. b. both wealthy people and poor people benefit directly. c. people work less and produce fewer goods and services. d. the government collects more revenue in total.