Suppose the U.S. government encouraged consumers to trade in their old automobiles for more efficient, new models by paying up to $5,000 for the old automobiles. These consumers who did trade in their old automobiles to take advantage of the government

offer would be exemplifying the economic idea that

A) people are rational.
B) people respond to economic incentives.
C) optimal decisions are made at the margin.
D) equity is more important than efficiency.


Answer: B

Economics

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What role do households play in output markets? What role do households play in factor markets?

What will be an ideal response?

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Suppose a wealthy Canadian donates $10 million to charities in Mexico. Mexican net exports ________ and the current account balance ________

A) fall; rises B) rise; rises C) are unchanged; is unchanged D) fall; is unchanged

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Product differentiation in monopolistically competitive markets ensures that, for profit-maximizing firms,

a. marginal revenue will equal average total cost. b. price will exceed marginal cost. c. marginal cost will exceed average revenue. d. average variable cost will be declining.

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