A man who thinks he would save money by driving to work rather than taking the bus, but who nonetheless elects to take the bus because driving in rush-hour traffic frightens him, is
A) behaving inefficiently.
B) choosing what is for him the most efficient way to commute.
C) rejecting economic efficiency for personal reasons.
D) wasting scarce resources.
B
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Classical macroeconomic theorists believed that economic downturns:
A. would not end quickly without government intervention. B. could be completely eliminated through increased government spending. C. would not lead wages to fall. D. would generally reverse themselves quickly without policy intervention.
According to this Application, the volatility of energy prices can contribute to uncertainty in the economy. An increasingly uncertain future will tend to cause firms to
A) delay their investment decisions. B) continue with a stable flow of investment spending so as not to get trapped by a downturning economy. C) wait for significant GDP growth before reducing investments. D) rely on the government to make their investment decisions for them.
With free trade between China and the United States, the winners are ___________ and the losers are _______
A. U.S. consumers of U.S. imports; U.S. producers of the U.S. import good B. China's consumers of China's imports; China's producers of its export good C. U.S. producers of the U.S. export good; U.S. consumers of U.S. imports D. China's consumers of China's export good; China's producers of its imported good
Losses are important to a competitive price-searcher market (industry) because they send a message to the market participants that
a. more resources should be devoted to a particular industry. b. resources can rise in value if diverted away from that particular industry. c. resources are allocated exactly as they should be. d. the firms should charge lower prices.