People's willingness to buy an iPhone or Android phone depends on how popular the smartphone format is among other consumers. This is an example of
A. the prisoners' dilemma.
B. a network effect.
C. a cartel.
D. an opportunity cost.
Answer: B
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In evaluating the degree of economic efficiency in a market, we can state that the size of the deadweight loss in a market will be smaller
A) the greater the difference between marginal cost and average revenue. B) the smaller the difference between marginal cost and price. C) the greater the difference between marginal cost and price. D) the smaller the difference between marginal cost and average total cost.
When the real quantity of money supplied equals the real quantity of money demanded, there is said to be
A) goods market equilibrium. B) asset market equilibrium. C) monetary neutrality. D) money illusion.
The cross-price elasticity of demand for peanut butter with respect to the price of jelly is -0.3. If we expect the price of jelly to decline by 15%, what is the expected change in the quantity demanded for peanut butter?
A) +15% B) +45% C) +4.5% D) -4.5%
Which of the following assumptions best explains how people make decisions, according to economists?
a. People make the best choice they can because they do not want to make themselves worse off. b. Money incentives matter the most because no matter how much people have they want more. c. Few people are systematic about decision making, and many disregard their own values. d. Individuals consider past experiences but fail to evaluate expected future circumstances.