Explain the economic idea that "people respond to incentives."
What will be an ideal response?
Human beings act from a variety of motives, including religious belief, envy, and compassion. "People respond to incentives" means that people will act in the way that they feel is in their best interest.
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If point A on an indifference curve lies higher (measured vertically) than point B on the same curve, Point A automatically represents higher total utility than point B.
Answer the following statement true (T) or false (F)
Which of the following is TRUE?
a. Purchase a supplier as long as the supplier is profitable b. Purchasing a profitable customer would lead to an increase in profits c. Purchasing a profitable supplier may not necessarily increase your profits d. Purchasing a profitable supplier is a bad idea and would lead to decreased profits
If the government intervenes in a labor dispute and requires settlement through binding arbitration, what takes place?
a. A neutral third party makes a decision that both parties must accept. b. A neutral third party makes a decision that both parties may reject. c. One party sues the other in court. d. The two parties negotiate an agreement without assistance and both must accept it. e. The two parties negotiate an agreement with assistance from their attorneys and both must accept it.
If 400 apple pies are sold at $4 per pie, but 600 apple pies are sold at $3 per pie, we know: a. that the demand for pies is elastic over that price range
b. that the demand for pies is inelastic over that price range. c. that the demand for pies is unit elastic over that price range. d. nothing about the elasticity of demand.