Use the following two statements in answering this question: I. All Giffen goods are inferior goods. II. All inferior goods are Giffen goods
A) I and II are true.
B) I is true, and II is false.
C) I is false, and II true.
D) I and II are false.
B
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In the short run, a perfectly competitive firm's economic profits
A) must equal zero, that is, the firm earns a normal profit. B) must be positive. C) might be positive, negative (an economic loss), or zero (a normal profit). D) must be negative, that is the firm must incur an economic loss.
Consumer surplus in a market for a product would be equal to the area under the demand curve if
A) the product was produced in a perfectly competitive market. B) marginal cost was equal to the market price. C) the market price was zero. D) producer surplus was equal to zero.
The above figure shows supply and demand curves for apartment units in a large city. If the city government passes a law that establishes $350 per month as the legal maximum rent, producer surplus decreases by
A) d. B) b + f. C) c + g. D) i.
The assumption of rationality in economics implies that:
a. people perfectly understand their own preferences. b. people can overcome economic obstacles in the best possible way. c. people can make accurate calculations and they have a perfect foresight. d. people make choices with an eye toward attaining objectives they have chosen.