The idea that people will not consciously make decisions that make them worse off is known as
A) rationality assumption.
B) the decision duality.
C) Adam Smith's doctrine.
D) incentive assumption.
Answer: A
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If the exchange rate between yen and dollars were 120 yen per dollar, when an American purchases a good valued at 600 yen, its cost in dollars would be: a. $5
b. $600. c. $72,000. d. $120.
Answer the following statement true (T) or false (F)
1) Supply-side market failures occur because it is impossible in certain cases for sellers to charge consumers what they are willing to pay for a product. 2) When a supply-side market failure occurs, the costs are greater than the benefits for the last unit(s) of output produced. 3) Along a demand curve, product price and consumer surplus are inversely related. 4) Along a supply curve, product price and producer surplus are inversely related.
Suppose country A pegs its nominal exchange rate to country B and that country A has a higher inflation rate than country B. In this situation, country A will experience
A) a real appreciation. B) a worsening trade position. C) an increase in the real exchange rate. D) all of the above E) none of the above
If a person takes an action if, and only if, the extra benefits from taking that action are at least as great as the extra costs, then that person is:
A. not rational. B. not following the Cost-Benefit Principle. C. following the Cost-Benefit Principle. D. following the Scarcity Principle.