Economists believe that human behavior follows economic principles to some extent because

Select one:

a.

people are intelligent and study the principles until it becomes natural for them to act according to the principles.

b.

Everyone is socialized into similar preferences and therefore no one is really free to choose

c.

People muddle through life learning from their mistakes and finally end up doing what economic theory predicts they will do.

d.

Emotions, social norms, and values are all based on rational choice concepts.

In Hardin's example of a shared commons, what is the rational strategy for herdsmen to act in their own best interest?

Select one:

a.

Keep fewer cows

b.

Have the same amount of cows as their neighbour

c.

Buy more cows

d.

Get out of the grazing business

Which statement is true of a typical market supply and demand situation?

Select one:

a.

At equilibrium supply equals demand and the quantity supplied equals the quantity demanded.

b.

At a price lower than the equilibrium price, demand has increased from where it was at equilibrium

c.

At a price higher than equilibrium more goods are sold because firms find it profitable to produce more.

d.

All of the above statements are true for a market situation.

What is the task of rational choice theory?

Select one:

a.

to identify the feelings and emotions influencing consumers' decisions

b.

to identify the trade offs consumers are willing to accept with respect to product attributes

c.

to identify or discover the one optimal choice for the decision confronting the decision maker

d.

to identify the cognitive structure of consumers when making a choice

Homo Economicus, as a model of behaviour, ...

Select one:

a.

focuses on personal material costs and benefits rather than other more social values.

b.

would be a good guide for people to follow in their relationships with others.

c.

is built on trust of others which is why it works in a free society where trust is important.

d.

includes many motives for behavior that are not usually part of economic thinking.

The term 'empty world economics' implies that

Select one:

a.

the lack of natural capital is the limiting factor in economic development

b.

the lack of human-made capital is the limiting factor in economic development

c.

the lack of human capital is the limiting factor in economic development

d.

all of the above

The law of demand refers to the idea that people

Select one:

a.

buy more of a good as their income increases.

b.

buy more of a good as the price of the good falls.

c.

will spend all of their money on something.

d.

want more of everything even if they have no money to buy anything.

Which of the following statements is NOT true? In the free market, changes in the price of a product:

Select one:

a.

result from the interplay of demand and supply

b.

can provide an incentive to reallocate resources

c.

are set by the government

d.

can act as a signal to producers

If the equilibrium quantity is 10 units but 12 units are being consumed we can be sure that

Select one:

a.

the benefits of the last two units are less than the costs of producing those goods.

b.

it would be possible for society as a whole to be better off if only 10 were produced.

c.

The efficiency problem could be solved if the demand curve shifted right.

d.

All of the above are true.

The acronym TINA implies that:

Select one:

a.

free markets, free trade, and capitalist globalisation are the best or the only way for modern societies to develop

b.

there is no viable alternative to neoliberalism

c.

global capitalism is the only system possible and that debate about this is over

d.

all of the above