According to prospect theory,
A) people are concerned with wealth levels only.
B) people are concerned with changes in wealth levels only.
C) people never use a reference level when making their decisions.
D) everybody is risk-neutral.
B
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People like consuming peanut butter and jelly together. The price of peanuts increases. At the same time, we see the price for Jelly rise. This would make the price for peanut butter_____________ and the quantity demanded for peanut butter ____________
a. Uncertain; decreases b. Decreases; increases c. Decreases; uncertain d. Increases; uncertain
To promote economic efficiency, government should
a. keep all prices as low as possible. b. keep all prices high so that people will save more money. c. allow the market to set low prices for abundant goods and high prices for scarce goods. d. never interfere with firms' price setting powers.
An increase in the supply of labor
a. increases the equilibrium wage and increases the value of the marginal product of labor. b. increases the equilibrium wage and decreases the value of the marginal product of labor. c. decreases the equilibrium wage and increases the value of the marginal product of labor. d. decreases the equilibrium wage and decreases the value of the marginal product of labor.
Between points b and c in the figure above, the opportunity cost of another bushel of corn is
A) 1 yard of cloth. B) 1.25 yards of cloth. C) 1.5 yards of cloth. D) 2.5 yards of cloth.