People might experience rational inattention if they
A. become irrational involuntarily.
B. have rational expectations.
C. acquire information infrequently and make decisions based on incomplete information during the intervals between updates.
D. update the state of the economy too frequently so they become confused about the information for their decisions.
Answer: C
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An import quota specifies
A) the amount of funds that can be paid for any imported good. B) the amount of taxes that must be paid on any imported good. C) the maximum amount of an item that may be imported during a specified period. D) the minimum amount of an item that may be imported during a specified period.
The authors of the text suggest that a comprehensive personal income tax with few loopholes would be efficient and equitable. What is their reasoning for this statement?
Figure 5-1
In , S1 and D illustrate the demand and supply for a product if it were produced in a normal competitive market. Which of the following would be true if the firms in the industry were instead able to get government licensing restrictions to limit competition in the market?
a.
The restricted market supply would be S3, resulting in a lower price and a higher than efficient level of output.
b.
The restricted market supply would be S3, resulting in a higher price and a less than efficient level of output.
c.
The restricted market supply would be S2, resulting in a lower price and a higher than efficient level of output.
d.
The restricted market supply would be S2, resulting in a higher price and a less than efficient level of output.
Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except
A) engage in mutually beneficial trade with other nations. B) increase the variety of products that it can consume with no increase in resources. C) consume a combination of goods that lies outside its own production possibilities frontier. D) produce a combination of goods that lies outside its own production possibilities frontier.