Answer the following statement(s) true (T) or false (F)
1. If a model is based on unrealistic assumptions, then it cannot be robust.
2. Equilibrium conditions are used to analyze the desirability of economic outcomes.
3. A Nash equilibrium is one in which each individual optimizes taking market prices as given.
4. Efficiency is one common criterion that economists use to judge whether or not an outcome is desirable.
5. Even if an economic model is not detailed enough to give numerical predictions, it might still be useful if it can indicate the direction of change in economic variables.
1. False
2. False
3. True
4. False
5. True
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Refer to Table 4-1. The table above lists the highest prices three consumers, Curly, Moe, and Larry, are willing to pay for a bottle of champagne. If the price of one of the bottles is $95 dollars, total consumer surplus will be
A) $0. B) $35. C) $80. D) $95.
Legally speaking, the geographic concentration of slavery in the southern part of the U.S. is explained by all of the following except:
a. provisions in the Northwest Land Ordinance of 1787. b. plantations employing high slave labor were present in Southern states. c. laws allowing for gradual emancipation in some northern states. d. an amendment to the U.S. Constitution that allowed importation of slaves only through the port of Charleston after 1800.
Which of the following is NOT among the statements that critics of prospect theory have made about it?
A. It is not necessary, since expected utility theory accounts rather well for most risky choices. B. The evidence reflects systematic mistakes that consumers might correct through experience and awareness. C. Instead of explaining behavioral puzzles, prospect theory merely summarizes them. D. Loss aversion has been proven to be false in many theoretical and experimental economic works.
Which of the following is a source of inequality in incomes?
a. job preferences b. willingness to take risks c. differences in investment in human capital. d. All of the above are correct.