"If Tom had twice as much money, he could consume twice as much. If everyone had twice as much money, they could consume twice as much." This quote illustrates
a. the difference between positive and normative economics.
b. the fallacy of composition.
c. that association is not causation.
d. the law of unintended consequences.
B
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When firms in an industry are selling similar products, and they agree to share the market,
A) each firm earns a profit even though marginal cost is greater than marginal revenue. B) each firm secures a net revenue about as large as it would have received if it were the only seller. C) they try to keep each firm's price above its marginal cost. D) they tend to produce higher prices and larger output. E) the agreement will enforce itself because none of the firms will have an interest in triggering a competitive struggle.
Do policies that alter the distribution of income also entail a change in property rights?
A) It is impossible to tell because of the uncertainty such policies create. B) Not if they are confined to changing relative prices. C) Not if they redistribute income without confiscating anyone's wealth. D) They do so necessarily.
The basic difference between macroeconomics and microeconomics is:
What will be an ideal response?
A country's long-run aggregate supply curve will shift to the left when there is (are)
A. a discovery of new oil reserves in that country. B. fewer regulatory impediments to business. C. a reduction in the money supply. D. a reduction in the labor force.