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(Consider This) Suppose that coffee growers sell 200 million pounds of coffee beans at $2 per pound in 2015 and 240 million pounds for $3 per pound in 2016. Based on this information, we can conclude that the
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Demand for coffee beans has increased
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Which of the following statements is true about risk management in market systems versus command systems?
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Market systems manage risk better because entrepreneurs taking risks bear the costs of poor decisions, whereas in command systems government decision makers don't bear those costs.
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A supply curve that is a vertical straight line indicates that
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a change in price will have no effect on the quantity supplied.
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In the simple circular flow model,
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businesses are sellers of final products.
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Thea committed a traffic violation that resulted in an accident. She learns first that the violation will result in a $500 fine; she then learns that she will have to pay another $500 for damage caused in the accident. According to prospect theory,
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she will suffer less disutility from paying for the accident damage than from paying the fine.
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The invisible hand refers to the
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notion that, under competition, decisions motivated by self-interest promote the social interest.
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You should decide to go to a movie
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if the marginal benefit of the movie exceeds its marginal cost.
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According to prospect theory, what strategy will firms typically employ with regard to pricing and packaging of their goods, when faced with rising production costs?
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Firms will reduce package sizes but keep prices the same, thus increasing the per unit price of the good.
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The dictator game and ultimatum game are experiments that have provided field evidence for
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fairness.
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"Essential" water is cheaper than "nonessential" diamonds because
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the supply of water is great relative to demand and the supply of diamonds is small relative to demand.
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The main function of the entrepreneur is to
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innovate.
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The dictator game
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demonstrates that people care about fairness and will sacrifice financially for others.
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Suppose that a nation can only make two products: defense goods and civilian goods. In a graph of the marginal benefit (MB) and marginal cost (MC) of defense goods, a leftward shift of the MB curve will cause the optimal quantity of
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defense goods to decrease.
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The human tendency to believe only those data that agree with one's preconceptions and ignore other data that contradict the preconceptions is called
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confirmation bias.
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A consumer's demand curve for a product is downsloping because
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marginal utility diminishes as more of a product is consumed.
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In the circular flow model, households earn their incomes in the
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resource markets.
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Which of the following individuals least likely suffers from myopia?
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Myrna, who lived through the Great Depression and tends to spend frugally and save most of her money.
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Which of the following would best be classified as a complement for new houses/homes?
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mortgage loans
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If sellers could price-discriminate and charge two different prices to two different groups of buyers in order to increase revenues, then the sellers would charge
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a higher price to the buyers whose demand is inelastic.
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The supply of product X is perfectly inelastic if the price of X rises by
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10 percent and quantity supplied stays the same.
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If competitive industry Z is making substantial economic profit, output will
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expand in industry Z, as more resources will move to that industry.
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If products were in short or surplus supply in the Soviet Union,
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producers would not react because no price or profit signals occurred.
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