In Homer's Odyssey, Odysseus instructs his crew members to tie him to the mast of the ship so that he is not later tempted by the Siren's song. Which of the following irrational behaviors was he trying to avoid?
a. People are overconfident
b. People behave in a time inconsistent manner.
c. People give too much weight to a small number of vivid observations.
d. People are reluctant to change their minds.
b
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Money eliminates the need for a coincidence of wants primarily through its use as a:
A. store of value. B. medium of exchange. C. unit of account. D. standard of confidence.
Short-run total cost is defined as
A. total fixed cost plus total variable cost. B. total capital cost only. C. price of labor per unit multiplied by the number of labor units. D. the sum of marginal cost and total variable cost.
Answer the following statement(s) true (T) or false (F)
1. A firm earns a positive economic profit when the market price exceeds its marginal cost. 2. As long as profits remain positive, a firm will want to increase the quantity produced. 3. Only variable costs are relevant to a firm's decision to shut down. 4. When a firm has chosen to shutdown it has exited the industry. 5. A competitive firm will exit the industry in the long run if the price of its product falls below its average cost.
One key implication of rational expectations is that
A) anticipated monetary policy has no effect on the rate of unemployment or the level of real GDP. B) unanticipated monetary policy has no effect on the economy but anticipated monetary policy does have an effect on the economy. C) anticipated monetary policy can affect the rate of unemployment but not the level of real GDP. D) both unanticipated monetary policy and anticipated monetary policy have an effect on the economy.