Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?
a. There is no such thing as a free lunch.
b. People buy more when prices are low than when prices are high.
c. No matter how much people earn, they tend to spend more than they earn.
d. Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.
D
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The long-run supply curve for a firm in a perfectly competitive industry is:
A) negatively sloped. B) positively sloped. C) vertical. D) horizontal.
In the long run, most economists agree that a permanent increase in government spending leads to ________ crowding out of private spending
A) complete B) partial C) no D) more than complete
The motivating force behind an increase in supply in a long-run adjustment to equilibrium is
a. lower prices. b. economic profits that are present in the short run. c. higher profit expectations among owners of firms in the industry, triggered by increased prices. d. normal profits witnessed by individuals outside the industry that trigger entry. e. the decreases in average cost that can be obtained through economies of scale.
When people retroactively believe that they had accurately foreseen past events, they are illustrating the:
A. Confirmation bias B. Framing effect C. Hindsight bias D. Self-serving bias