In the 1960s, the lyrics of a rock song asked, “Did you ever have to make up your mind to say yes to one and leave the others behind?” What economic principle was demonstrated in the song? Explain.
What will be an ideal response?
The principle is that of opportunity cost. Selecting one person to date and marry means saying no to all others—at least in societies that prohibit polygamy.
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The classical model makes little distinction between the long run and short run because
A) wages and prices adjust so fast that the economy is quickly moving towards the long run. B) the model has not been fully developed yet. C) current changes influence the long run, so it is not possible to plan for the future. D) the classical economists knew that we are always operating in the short run.
Under conditions of perfect competition, if losses occur in an industry, market forces may come into play to
a. reduce supply. b. lower average revenue. c. increase supply. d. attract new firms.
What country is the largest holder of foreign debt in the world?
A. U.S.A B. China C. Germany D. United Kingdom E. Russia
Falling transportation costs in the 19th century
a. fostered regional specialization according to comparative advantage. b. created increasing lags for price declines along the Mississippi. c. propelled the process of western expansion. d. All of the above. e. Both a and c are correct.