You may incorrectly conclude that an idea no other person has implemented is highly profitable because:
A. you misunderstood how people would respond to incentives.
B. you miscalculated the trade-offs people face.
C. you misjudged people's wants and constraints.
D. All of these.
Answer: D
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The J-curve effect in reference to the trade balance may persist:
a. for up to one year after the depreciation. b. permanently. c. for a few weeks only. d. for up to 10 years after the depreciation.
Suppose that consumers' preferences are well behaved in that properties 4-1 to 4-4 are satisfied. Furthermore, assume that both X and Y are normal goods and that the price of good Y increases. Then, which of the following effects is known with certainty?
A. The income and substitution effects will reinforce one another, leading to an overall increase in the consumption of good Y. B. There will be an indeterminate effect on the consumption of good X. C. The income and substitution effects reinforce one another, leading to an overall decrease in the consumption of good X. D. The income and substitution effects reinforce one another, leading to an overall increase in the consumption of good X.
Nonprice competition in monopolistically competitive markets results in
A. consumers buying the product with the lowest price in a differentiated market. B. less advertising and product differentiation than in markets without nonprice competition. C. rivalry among competing firms based on the characteristics that differentiate their products. D. price equaling the minimum average total cost in long run equilibrium.
Related to the Economics in Practice on page 198: If the long-run average cost curve in an industry has a long, flat section, which of the following must be true?
A. Existing firms have no incentive to expand. B. There is no single point on the curve that is the best. C. There would be no difference between the industry's short-run average cost curve and its long-run average cost curve. D. Small firms have higher average costs than large firms.