Sara looks into her closet and discovers a pair of like-new shoes she no longer wears because they are out of fashion. From the economist's perspective, was Sara behaving rationally when she bought those shoes?
A. It's not clear because psychology, not economics, deals with the rationality assumption.
B. No. If any of a person's decisions have poor results, that person is irrational.
C. Yes, Sara didn't buy those shoes when they were out of fashion.
D. No. The rationality assumption states that rational people never make mistakes.
Answer: C
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A) sum of a seller's reservation value and the price he finally receives. B) difference between a seller's reservation value and the price he finally receives. C) product of a seller's reservation value and the price he finally receives. D) ratio of a seller's reservation value to the price he finally receives.
An increase in the real interest rate ________ the quantity of loanable funds supplied and ________ the quantity of loanable funds demanded
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
The industrial organization economics perspective assumes that the industry _____________ is the most important determinant of long-run profitability
a. Structure b. Conduct c. Performance d. None of the above
An increase in taxes shifts the
a. aggregate supply curve outward. b. aggregate demand curve outward. c. consumption schedule upward. d. consumption schedule downward.