“Assume that all individuals have perfect information about prices now and in the future, that they have identical tastes, that all markets are competitive, and that there is no government." This statement is an example of how economists
A. apply the law of supply and demand.
B. employ marginal analysis.
C. are prevented from getting correct answers.
D. ignore reality.
E. use unrealistic assumptions to develop theory.
Answer: E. use unrealistic assumptions to develop theory.
You might also like to view...
Both the long-run and short-run aggregate supply curves will shift when
A) the endowments of the factors of production change. B) the government increases defense spending. C) an event occurs which is expected to last only a short period of time. D) they are both upward sloping.
The demand curve for a monopolist is
A) the industry demand curve. B) the same as the demand curve for a perfectly competitive firm. C) a perfectly inelastic demand curve. D) a unitary elastic demand curve.
The price of a good that prevails in a world market is called the
a. absolute price. b. relative price. c. comparative price. d. world price.
Why might government expenditures be more appropriate than tax cuts to counter recessions? Is there any evidence for this thinking?