Ford assembles some cars in Mexico because the lower wages the company pays to Mexican workers and the lower prices it pays for auto parts in Mexico reduces Ford's costs. This is an example of Ford reacting to which of the three key economic ideas?
A) People are rational.
B) People respond to economic incentives.
C) Optimal decisions are made at the margin.
D) Firms attempt to maximize revenues.
Answer: B
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Nick consumes two goods, chips and lemonade. Located on the x-axis is the quantity of chips and on the y-axis is the quantity of lemonade. The magnitude of the slope of the budget line equals the
A) price of lemonade. B) price of chips. C) price of chips/price of lemonade. D) price of lemonade/price of chips.
If a 20 percent decrease in the price of chicken results in a 10 percent increase in the quantity demanded, the price elasticity of demand has a value of
a. 0.5 b. 2 c. 1 d. 0.1 e. none of these
The study of the efficient allocation of the scarce means of production toward the satisfaction of human wants defines ______________.
Fill in the blank(s) with the appropriate word(s).
All of the following are characteristics of public goods EXCEPT
A) public goods can be used by more people at no additional cost. B) the good can be consumed by everyone at the same time without reducing what is available for anyone else. C) the exclusion principle. D) the goods are perfectly divisible.