When economists assume that people are rational and respond to incentives, they mean:
A. people act with kindness.
B. people are altruistic.
C. people act in their own self-interest.
D. people are selfish.
Answer: C
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If you included both time and entity fixed effects in the regression model which includes a constant, then
A) one of the explanatory variables needs to be excluded to avoid perfect multicollinearity. B) you can use the "before and after" specification even for T > 2. C) you must exclude one of the entity binary variables and one of the time binary variables for the OLS estimator to exist. D) the OLS estimator no longer exists.
"A perfect competitor should maximize total revenues." Do you agree or disagree? Explain
What will be an ideal response?
Which of the following would economists label as an example of the "tragedy of the commons?"
A. The over-grazing of private land by ranchers B. The disregard for health warnings on home-use pesticide sprays C. The loss of value that a homeowner incurs when they fail to maintain their lawn D. The over-grazing of public land by ranchers
A two-tier gold market like the one created during the Bretton Woods System refers to
A) a private tier for private gold traders where the price would not be allowed to fluctuate, and an official tier for central banks where the official gold price would be allowed to fluctuate. B) a private tier for private gold traders where the price would not be allowed to fluctuate, and an official tier for central banks where the official gold price would rise on a yearly basis by pre-determined increments. C) a private tier for private gold traders where the price would be allowed to fluctuate, and an official tier for central banks where the official gold price would be set at $35 an ounce. D) a private tier for private gold traders where the price would be set at $35 an ounce, and an official tier for central banks where the official gold price would be allowed to fluctuate. E) a private tier for private gold traders where the price of gold would rise on a yearly basis by pre-determined increments, and an official tier for central banks where the official gold price would be set at $35 an ounce.