1.According to the rationality assumption , economists argue that people _________________________________________________________ 2.Why do economists think that a serial killer like the Son of Sam was rational? _____________________________________________________________ 3.When economists argue that the Son of Sam was rational, are they condoning his behavior or explaining his actions? Why or why not? _______________________________________________________________ 4.If people are motivated by self-interest, does this preclude (or prevent) them from doing charitable acts? Why or why not? _________________________________________________________ 5.Are criminal cases such as the Bernie Madoff Ponzi scheme a strong indictment of laissez-faire policies? Why or why not? ________________________________________________________ 6.What knowledge or information did Columbus rely on for his 1492 voyage? Was he right? ________Was he rational? ______ Why or why not? ______________ What is the most important requirement needed to make Smith's Formula work or be applicable? _____________________________________________________ What type of competition seeks to profit from price differentials? __________________________________________________________ What type of competition seeks to profit from profit differentials? __________________________________________________________ What type of competition stems from sellers of substitutes? __________________________________________________________ What type of competition stems from new products, new processes, new markets, and new forms of business organization? ________________________________ What type of competition was responsible for Atlantic City's fall from being the "Queen of Resorts?" __________________. Was there anything that Atlantic City could do to eliminate this competition? __________ What type of competition brought Resorts International to Atlantic City? _______________________ What type of competition brought Resorts International to the Bahama casino industry? _______________________ What type of competition lead other casinos to follow Resorts' lead? _________________. Was there anything that Resorts could do to eliminate this competition? ________________ What could Las Vegas casino owners do to stop creative destruction? ______________. What did Las Vegas casino owners do to deal with this type of competition? ________________________ There are long-established casinos in Monaco and Macao. Are they both in the in the same market as Las Vegas casinos, or only in the same business? ___________________________________________________________ As cartels go, how significant is OPEC? ______________________________. Why?______________________________ What did OPEC do to eliminate product competition? ______________________________________. Why did OPEC have such limited product competition to contend with? __________________________________________________________ Why didn't the Arab boycott against the U.S. and The Netherlands work in 1973-74? _________________________________________________________ Why didn't Mexico join OPEC? ______________________________________ Mexico's increase in oil output following OPEC's price increases as a good example of which type of competition? _____________________________ The development of the North Sea oil fields after 1973-74 is a good example of which type of competition? __________________________________ The redesign of many products (e.g., appliances and autos) to make them more energy efficient is a good example of which type of competition? ____________________________________________ What did OPEC do (or could have done) to effectively eliminate or control product competition? __________________________________________ What did OPEC do (or could have done) to effectively eliminate or control the competition of capitals? __________________________________________ What did OPEC do (or could have done) to effectively eliminate or control creative destruction? __________________________________________ Chapter 5 28.Why are money transactions often referred to as one-sided transactions, whereas barter transactions are referred to a two-sided transactions? __________________________________________________________ 29.Where or when might you find barter in a modern economy?____________________________________________________________ 30.Barter severely limits exchanges because in order for barter trades to take place, there must be a __________________________________ 31.In measuring GDP, What is the common denominator that allows us to add up such very different products and services? ___________________________________________ 32.What do the economists who keep the NIPA do when the income-approach measure of GDP differs from the expenditure-approach measure of GDP? ______________________________ 33.The largest component in the Expenditure Approach to measuring GDP is ___________________________ 34.The largest component in the Income Approach to measuring GDP is ________________________________________________ 35.What types of activities are included in the underground economy? ____________________________________________________________ 36.How is the underground economy treated or handled in the measurement of GDP? __________________________________________________ 37.What types of activities are included in household production? _____________________________________________________________ 38.How is household production treated or handled in the measurement of GDP? ___________________________________________________________