Behavioral economists focus on the assumption that
A. consumers have limitations that prevent them from examining all possible choices when they make decisions.
B. consumers are irrational and so they do not seek to maximize utility.
C. consumer choice is perfectly predictable by basic economic theory.
D. consumer behavior cannot be predicted by economics.
Answer: A
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General Motors estimates that U.S. demand for its newest product will be: Qus = 30,000 - 0.5P. Export demand will be Qex = 25,000 - 0.5P. The total market demand curve for this product will be a
A) straight line with a slope of -0.5. B) straight line with a slope of -1.0. C) kinked line with the kink at Q = 25,000. D) kinked line with the kink at P = 50,000. E) none of the above
Suppose a sushi restaurant is making significant economic profit in the short run. In the long run
A) more people will open sushi restaurants, reducing the economic profit for each restaurant. B) high barriers to entry keep people from opening sushi restaurants. C) the government will require the sushi restaurant to sell part of its interests in the city. D) more people will open steak restaurants, increasing the economic profit for the sushi restaurant.
A firm typically achieves its position as a monopolist as a result of
A) a small market and a constant average cost. B) a downward sloping demand for the product. C) barriers to entry. D) the absence of long-run profits in an industry.
A perfectly competitive firm will produce at an economic loss (negative profit) in the short run rather than discontinue production if there is a rate of output at which price
a. exceeds average variable cost b. exceeds average fixed cost c. exceeds average total cost d. exceeds marginal revenue e. equals marginal cost