Economists assume people behave

In the study of macroeconomics, production leads to income, and income leads to production in a continuing cycle

Indicate whether the statement is true or false

If the federal government sets a minimum price for wheat at $5.00 per bushel when the equilibrium price is $4.50, then

A) a surplus will be created causing the price to fall to the equilibrium price of $4.50. B) a permanent surplus will develop because the government established the minimum price at $5.00. C) a shortage will be created causing the price to rise to the equilibrium price of $4.50. D) a permanent shortage will develop because the government established the minimum price at $5.00.

Indifference curve analysis:

A. presumes, as does utility analysis, that satisfaction is numerically measurable. B. presumes, unlike utility analysis, that satisfaction is numerically measurable. C. presumes only that the consumer can say one combination of two goods yields more or less utility than some other combination. D. is in conflict with the idea of a downsloping demand curve.

The supply curve for innovative activities

A. slopes upward because as the price of innovation rises, people who would otherwise become scientists begin to go into other occupations like law or business. B. slopes downward because as the price of innovation rises, people who would otherwise become scientists begin to go into other occupations like law or business. C. slopes downward because as the price of innovative activities rises, people will want to consume fewer innovative services. D. slopes upward because as the price of innovation rises, more people and capital will be attracted into innovative activities.