An economic model
a. omits critical elements
b. must be presented in mathematical terms
c. simplifies reality in order to focus on its essential elements
d. can never be proven wrong if its assumptions are realistic
e. produces poor predictions if it includes an unrealistic assumption
C
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For a household, the opportunity cost of not working is the
A) price level. B) nominal wage rate. C) demand for labor. D) cost of living. E) real wage rate.
If the production possibilities frontier of one trade partner ("Country A") is bowed out (concave to the origin), then increased specialization in production by that country will
A) increase the economic welfare of both countries. B) increase the economic welfare of only Country A. C) decrease the economic welfare of Country A. D) decrease the economic welfare of Country B. E) not affect the economic welfare of either country.
The isoquants for inputs that are perfect substitutes for one another consist of a series of:
a. right angles b. parallel lines c. concentric circles d. right triangles e. none of the above
A potential problem arises in principal-agent relationships
a. because the agents' actions are not completely observed by the principals b. because the principals' actions are not completely observed by the agents c. because the agent's and the principals' actions are completely observed by each other d. the observability of actions is irrelevant