The cost-benefit model used by economists is:
A. unrealistic because it is too detailed and specific to apply to most situations.
B. useful because everyone follows it all of the time.
C. unrealistic because everyone can think of times when he or she violated the principle.
D. useful because most people follow it most of the time.
Answer: D
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A principal-agent problem occurs when hiring workers to work for a firm because
A) workers' interests are not always the same as the interests of the owners of the firm. B) workers do not respond to incentives. C) the owners of a firm are always in a position to exploit the workers. D) workers' interests are not important in the managerial decisions of the firm.
The only reason that exchange rates change is because overall price levels in the countries change
Indicate whether the statement is true or false
Suppose the price of beans rises from $1.00 a pound to $2.00 a pound, quantity demanded falls from 10 units to 6 units. In this example, the demand for beans is said to be
A) relatively elastic. B) relatively inelastic. C) perfectly elastic. D) perfectly inelastic.
Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each. Which of the following statements is correct? (i) Marginal revenue equals $3. (ii) Average revenue equals $3. (iii) Total revenue equals $900
a. (i) only b. (iii) only c. (i) and (ii) only d. (i), (ii), and (iii)