If psychological limitations and other complications cause people to be unable to examine and think through every possible choice available to them and rely instead on rules of thumb, then these individuals exhibit
A) completely irrational behavior.
B) normative thinking.
C) bounded rationality.
D) positive thinking.
Answer: C
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The first example used to explain comparative advantage used two countries (England and Portugal) and two goods (wine and cloth) to show that
A) each country would be better off from trade if it had an absolute advantage in producing one of the goods. B) each country would have a comparative advantage in the production of the good for which it had an absolute advantage. C) mutually beneficial trade was possible between two countries even if one had a comparative advantage in the production of both goods. D) mutually beneficial trade was possible between two countries even if one had an absolute advantage in the production of both goods.
The rate at which an employer provides an incentive for an employee to perform (to increase effort) is the:
A. risk-sharing premium. B. efficient bargaining solution. C. incentive coefficient. D. informativeness quotient.
Anya has decided to start her own hair-styling salon. To purchase the necessary equipment, Anya withdrew $10,000 from her savings account, which was earning 3% interest, and borrowed an additional $5,000 from the bank at an interest rate of 8%. What is Anya's annual opportunity cost of the financial capital that has been invested in the business?
a. $300 b. $400 c. $700 d. $1,650
An economy in which output has decreased and prices have decreased would suggest a:
A. decrease in short-run aggregate supply. B. increase in aggregate demand. C. increase in short-run aggregate supply. D. decrease in aggregate demand.