Economists assume people behave rationally, which means that people
A) never make a mistake.
B) do not intentionally make decisions that make themselves worse off.
C) have the necessary information to always make correct decisions.
D) always understand the consequences of their decisions.
Answer: B
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Income tax acts as a shock absorber because
A. it makes disposable income, and thus consumer spending, less sensitive to fluctuations in GDP. B. it makes disposable income, and thus consumer spending, more sensitive to fluctuations in GDP. C. it makes disposable income, and thus consumer spending, independent of fluctuations in GDP. D. none of these.
Which of the following statements is true?
a. Real GDP is a positive function of net exports. b. In the 1980s, the United States experienced a large trade surplus with Japan. c. Positive net exports mean that the domestic country imports more than it exports. d. Total U.S. net exports with Western Europe are zero. e. U.S. net exports are negative because of large trade deficits with other industrial nations.
In a market for emission permits, firms that emit over their allowed limits
A. receive a subsidy for the amount of emissions. B. are taxed by the government for the amount of emissions. C. pay a price of these emissions. D. are forced to shut down.
In the graph below, if the government imposes an excise tax as shown, what is the tax burden to the seller? And to the buyer? Explain
What will be an ideal response?