To be useful, a model must
A) predict accurately all of the time.
B) predict more accurately than other models that have been developed.
C) have assumptions that have been verified by empirical testing.
D) explain and predict the behavior of every individual.
B
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If bank depositors in the U.S. suddenly decided to withdraw in currency everything in their checking accounts, commercial banks would
A) be better off because their legally required reserves would decline. B) be unable to meet their demands and would become insolvent. C) borrow the required Federal Reserve notes to meet the requests for currency. D) give them the currency held in their vaults as backing for the checking accounts. E) refuse to honor their requests for 30 days.
How could Adam Smith's comment about the butcher, the brewer, and the baker be accurately rephrased in modern terms?
A) The butcher, the brewer, and the baker give us our dinner because they want to be well liked in the community. B) The butcher, the brewer, and the baker give us our dinner because they will be sued if they don't do so. C) The butcher, the brewer, and the baker give us our dinner because they each earn a living by doing so. D) The butcher, the brewer, and the baker give us our dinner because they view doing so as a public service.
Answer the following questions true (T) or false (F)
1. Assume that the total for a given consumer, the marginal utility of food is 160 and the price of food is $40. Also, assume that the marginal utility of environment quality is 500 and the price of environmental quantity of $100. This consumer should partake in more environmental quality. 2. A good is said to be both normal and a necessity if the income elasticity of demand is greater than 1.0. 3. We expect the sign of the cross-price elasticity between pancakes and maple syrup to be negative.
The graphs below illustrate the market for a product on which an excise tax has been imposed by government. Refer to the below graph. How much of the excise tax per unit is shouldered by the buyers?
A. $3
B. $5
C. $6
D. $8