Self-interest relates to
A) only monetary objectives.
B) both monetary and nonmonetary objectives.
C) the ceteris paribus assumption.
D) normative economic analysis and not positive economic analysis.
B
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When two firms in a perfectly competitive market seek to maximize profit in the long run, they eventually end up:
A) producing at a suboptimal level. B) minimizing total cost of production. C) earning the same level of profits. D) producing the same level of output.
Jones and Smith live in the same apartment building. Jones loves to play his opera recordings so loudly that Smith can hear them. Smith hates opera. Jones receives $100 of benefits from his music and Smith suffers $60 of damages. a
From an efficiency perspective, should Jones be allowed to play his opera CDs? b. Suppose the apartment building does not have any rules about noise. Jones and Smith can bargain at zero cost. Will they reach an agreement where Jones gives up his beloved operas? c. Now suppose the apartment building passes a rule that says residents are not allowed to play music their neighbors can hear if any of the neighbors object. As before, Jones and Smith can bargain at zero cost. Will Jones be allowed to play his music?
How does adverse selection in financial markets affect the method by which firms raise funds?
What will be an ideal response?
Opening trade between a nation that has "cheap labor" and one that has "expensive labor" will
a. lower the standard of living in both countries. b. raise the standard of living in both countries. c. raise the standard of living in the "expensive labor" country and lower the standard of living in the "cheap labor" country. d. raise the standard of living in the "cheap labor" country and lower the standard of living in the "expensive labor" country.