Suppose the U.S. government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000. These doctors 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
You might also like to view...
Which of the following is not an example of a market?
A. An auction B. Grocery store C. Donation center D. EBay
A merger between firms at different stages of production of a good
A) is a vertical merger. B) was made illegal by the Sherman Act. C) was made legal by the Clayton Act. D) is a horizontal merger.
The three main methods that governments use to cope with an external cost of production include all of the following EXCEPT
A) taxes. B) mandating clean technology. C) cap-and-trade D) price floors.
Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar. What is the opportunity cost of producing coffee in Chile?
a. Half a pound of sugar b. Two-fifth of a pound of sugar c. 2 pounds of sugar d. One-third of a pound of sugar e. 4 pounds of sugar