To be valid, an economic model must
a. include every activity that occurs in the real world
b. include every economic activity that occurs in the real world
c. be useful in explaining cause-and-effect relationships in the real world
d. exclude any link to the real world
e. not be based on an abstraction of the real world
C
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A price floor is the ________
A) maximum willingness to pay for a good B) minimum price that a seller accepts for a good C) lower limit on the price of a good D) upper limit on the price of a good
Refer to the above figure. If the government uses rate-of-return regulation for the natural monopolist, the firm will charge price
A) P5 and sell Q1 units. B) P2 and sell Q1 units. C) P3 and sell Q3 units. D) P1 and sell Q4 units.
Which of the following statements is not correct?
a. A free rider is a person who benefits from something for which he or she does not have to pay. b. The creation of general knowledge is a public good. c. The Tragedy of the Commons illustrates the underuse of a common resource. d. A gasoline tax is an imperfect solution to the problem of traffic congestion on public roads.
Which of the following is most likely to represent causality rather than association?
A. In years that fashion dictates wider lapels on men's jackets, the stock market grows by at least 5 percent. B. Interest rates are higher in years ending with a 1 or a 6. C. Unemployment falls when the AFC champion wins the Super Bowl. D. Quantity demanded goes up when price falls because lower prices increase consumer purchasing power, ceteris paribus.