A student noted that the football team won by a larger margin when the third-string played more minutes. Therefore, he recommended that the third-stringers become the first team. His conclusion was probably erroneous because he
a. confused positive and normative analysis.
b. committed the fallacy of composition.
c. failed to recognize that association is not causation.
d. confused macroeconomics with microeconomics.
C
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According to the principle of increasing costs, as the production of one good expands, the opportunity cost of producing another unit of the good tends to increase.
Answer the following statement true (T) or false (F)
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
Supply-side economic policies are best viewed as
a. a short-run countercyclical tool. b. a long-run strategy to promote economic growth. c. a strategy for the control of long-run inflation. d. a stabilization tool to smooth the ups and downs of the business cycle.
Taxes cause deadweight losses because taxes
a. reduce the sum of producer and consumer surpluses by more than the amount of tax revenue. b. prevent buyers and sellers from realizing some of the gains from trade. c. cause marginal buyers and marginal sellers to leave the market, causing the quantity sold to fall. d. All of the above are correct.