"After every fall election, the weather starts to turn cold, therefore elections cause cold weather." This statement
a. confuses positive and normative analysis.
b. commits the fallacy of composition.
c. fails to recognize that association is not causation.
d. confuses macroeconomics with microeconomics.
C
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What is the commodity substitution bias? What effect does it have on the CPI?
What will be an ideal response?
When an oligopoly market is in Nash equilibrium
A) a firm will choose its best pricing strategy, given the strategies that it observes other firms have taken. B) firms will not behave as profit maximizers. C) firms have colluded to set their prices. D) a firm will not take into account the strategies of its rivals.
Autarchy as used in the text refers to
(a) an economy that does not trade. (b) an economy that trades primary products in exchange for manufactures. (c) developing country dictatorships. (d) the caste system and related social structures.
We assume leisure is a normal good. This implies that
A) an increase in taxes decreases the demand for leisure. B) households maximize utility. C) preferences over consumption are well defined. D) an increase in the wage increases demand for leisure.