John is an athlete. He has $120 to spend and wants to buy either a heart rate monitor or new running shoes. Both the heart rate monitor and running shoes cost $120, so he can only buy one. This illustrates the principle that
a. trade can make everyone better off.
b. people face trade-offs.
c. rational people think at the margin.
d. people respond to incentives.
b
You might also like to view...
How much do you believe that current tax policy is influenced by politics, as opposed to sound and efficient tax policy?
What will be an ideal response?
Which of the following values of the Lerner Index indicates the greatest amount of market power?
A) 0.313. B) 0.375. C) 0.6. D) 0.625.
Compared to the profit-maximizing outcome, marginal cost pricing in natural monopoly leads to
a. reduced demand b. higher price c. reduced consumer surplus d. more economic profit e. greater output
Disposable income can be defined as national product
A. minus federal and state taxes. B. minus taxes plus transfers. C. minus indirect taxes. D. plus taxes plus transfers.