Juan and Sophia have decided to stop studying economics and get a bite to eat. Juan wants to go for a pizza and Sophia wants a hamburger. They decide to go for pizza. What can we conclude from this?
A) Juan always gets more utility from pizza than Sophia does.
B) Sophia gets less utility from pizza than she could from a hamburger.
C) Sophia will get negative utility from the pizza.
D) Utility analysis does not work here since Sophia did not eat a hamburger.
Answer: B) Sophia gets less utility from pizza than she could from a hamburger.
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In the years immediately following the passage of the American Recovery and Reinvestment Act, interest rates ________, and the prices of goods and services ________.
A. remained high; barely changed B. fell dramatically; rose at higher-than-normal rates C. rose sharply; fell sharply D. remained low; rose at lower-than-normal rates
When tradable allowances are used to correct negative externalities in a market, the outcome:
A. limits the quantity bought and sold to the efficient level. B. maximizes surplus. C. is efficient. D. All of these statements are true.
Which of the following questions would economists most likely disagree about?
a. What will be the effect of the new minimum wage on the sales of a product? b. How much should a company increase the price of a product? c. How much will demand increase for a product if the price decreases by 2 percent? d. What will be the increase in production with new technology in place?
The economic way of thinking has to do with:
A) analyzing benefits but not costs. B) analyzing costs but not benefits. C) making choices at the margin. D) making the distinction between microeconomics and macroeconomics.