Assumptions for economic theories and models should be
A. maintained until overwhelming evidence to the contrary occurs.
B. logical rather than empirically testable.
C. simple and reasonable rather than complex.
D. rejected if they are not totally realistic.
Answer: C
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"According to the Coase theorem, if Gabriel wants the local television station to cease having helicopters fly over his house at night, he will be more likely to be able to reach an agreement with the station if the property right to the airspace is
clearly defined and the transaction costs of negotiating are high." Is this statement true or false? Explain your answer.
Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. The base year is 2012. Nominal GDP in 2013 is equal to
A) $500. B) $800. C) $640. D) $625. E) $200.
When firms set prices by adding a fixed percentage markup to marginal costs, they are likely
A) concerned with the rate of profit rather than its net amount. B) earning a satisfactory rather than a maximum profit. C) exploiting their customers. D) poorly managed. E) searching for the most advantageous prices to set on the basis of limited information.
Which of the following is not necessarily true for a profit-maximizing single-price monopolist?
A) P > ATC B) P > MC C) P > MR D) MR = MC