According to the rational choice model which of these two events should be valued more by rational consumers: 1: gift of mug valued at $10, 2: finding the mug you thought was lost, which cost you $10 to purchase.
A. Event A
B. Both events should have the same value.
C. Event B
D. There is really no way to rationally decide.
Answer: B
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A) 0 and 1000 B) 1000 and 3000 C) 3000 and 4000 D) 4000 and 4500
Does the money demand curve have a positive slope or a negative slope? Why does it have this slope? Explain why an increase in the variable on the vertical axis of the money demand curve causes either an increase or a decrease in the variable on the
horizontal axis of the money demand curve.
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