What is the basic task that economists expect the market to carry out?
a. deal with the fundamental problem of scarcity
b. balance the government's budget
c. lessen wants to the level of income available
d. meet all human wants
a
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Standard economic theory asserts that sunk costs are irrelevant in making economic decisions, yet studies conducted by behavioral economists reveal that sunk costs often affect economic decisions. Which of the following could explain this observation?
A) Even though sunk costs cannot be recovered, it has been incurred and therefore should be treated as part of the product's value. B) People measure the value of a good in terms of its purchase price. C) Sunk costs have a higher opportunity cost than costs that can be recovered. D) If consumers maximize their utility, it makes sense to consider the full purchase price of a product in their consumption decisions.
From the late 1960s to the late 1990s, the share of GDP devoted to government purchases
A) drifted gradually upward. B) drifted gradually downward. C) remained fairly steady. D) increased, but only after the onset of a war or a military buildup.
When the price level falls, the total quantities of goods and services demanded:
A. decrease. B. stay the same. C. increase. D. increases and then decreases.
If smartwatches are considered substitutes for smartphones, the decline in the price of smartphones would, all else equal
A) increase the quantity of smartwatches demanded. B) decrease the quantity of smartwatches demanded. C) increase the demand for smartwatches. D) decrease the demand for smartwatches.