Which of the following statements best illustrates the form of an economic theory?
A. If A, then B.
B. If A, then B, when C, D, E, and F are also changing.
C. A, B, and C all occurred at the same time.
D. If A, then B, other things held constant.
Answer: D
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Refer to Figure 10-8. Given the budget constraint in the diagram, which of the following statements is false?
A) Consumption bundles b and c yield the same level of utility, which is higher than the utility represented by bundle a. B) The consumer's optimal bundle could be bundle d, e, or f. C) Although the consumer receives the same level of utility from bundles d and e, she cannot afford to purchase bundle d. D) The consumer receives the same level of utility from consumption bundles d, e, and f.
Rent controls a. are an example of price floors
b. are an example of price ceilings. c. destroy wealth by preventing the movement of apartments to higher-valued use. d. Both b and c
If the price of refillable butane lighters was to decrease, then
A) the demand for butane would decrease. B) the demand for butane would increase. C) the quantity of butane demanded would increase. D) the quantity of butane demanded would decrease.
In the long run, a firm in a perfectly competitive market will
A) make zero economic profit, so that its owners earn a normal profit. B) make zero normal profit but its owners will make an economic profit. C) remove all competitors and become a monopolistically competitive firm. D) incur an economic normal loss but not earn a positive economic profit. E) remove all competitors and become a monopoly.