"As soon as a mayor announced his/her 'get tough on crime' policy on New Year's day, criminals got scared and the crime rate went down." Suppose that the lower crime rate was actually caused by freezing cold temperatures in January?it was just too cold for anybody to be out robbing other people. Which fundamental hazard of the economic way of thinking did the mayor make?
A. believing that what's good for one person is good for the whole group (the fallacy of composition)
B. failing to take into account the benefits of crime (the payoff fallacy)
C. believing that association is the same as causation
D. failing to understand the difference between positive and normative economics.
Answer: C
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Equilibrium expenditure is the level of aggregate expenditure at which
A) aggregate planned expenditure equals real GDP. B) aggregate private expenditure equals real GDP. C) planned inventory investment equals zero. D) aggregate production equals real GDP. E) aggregate actual expenditure equals real GDP.
When a union faces a monopsony buyer, a ________ exists
A) dual-monopoly B) monopoly C) bilateral monopoly D) monopolistic monopsony
Jon's income-consumption curve is a straight line from the origin with a positive slope. Now suppose that Jon's preferences change such that his income-consumption curve remains a straight line but rotates 15 degrees clockwise
Jon's demand curve for the good on the horizontal axis A) will shift left. B) will shift right. C) will not change. D) might do any of the above.
If the government imposes a price ceiling that is lower than the market clearing price, then
A) consumer surplus will increase while producer surplus will decrease. B) consumer surplus will decrease while producer surplus will increase. C) both consumer surplus and producer surplus will decrease. D) both consumer surplus and producer surplus will increase.