Rational self-interest means
A. pursuing activities that maximize income.
B. pursuing what makes you better off.
C. always pursuing activities that are consistent with your faith.
D. always increasing your wealth.
Answer: B
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Figure 4.2 illustrates the supply and demand for t-shirts. If the actual price of t-shirts is $15, we would expect that
A) price will decrease until quantity demanded equals quantity supplied. B) supply will increase until quantity demanded equals quantity supplied. C) demand will decrease until quantity demanded equals quantity supplied. D) there will be no change in the price since the market is in equilibrium.
An economist encounters some unexpected behavior in a market or laboratory setting. How can he or she distinguish between behavior resulting from mistakes by decision makers as opposed to being decisions based on unusual preferences?
a. If the same behavior is observed repeatedly even after opportunities to learn are provided, it is probably not a mistake. b. If the behavior is observed more often with inexperienced subjects, it is likely a mistake. c. Both a and b. d. It is impossible to distinguish between mistakes and unusual preferences empirically.
All the costs associated with making, reaching, and enforcing agreements are called
A) private costs. B) opportunity costs. C) transaction costs. D) social costs.
Which of the following would cause both the equilibrium price and equilibrium quantity of oysters (assume that oysters are a normal good) to decrease?
A) an oil spill that sharply reduces oyster output B) a decrease in consumer income C) a technological advancement in the production of oysters D) an increase in consumer income