Statements that are a hypothesis or statement of fact are:
A) pecuniary.
B) positive.
C) nominal.
D) normative.
Ans: B) positive.
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The cost-plus-markup theory is an inadequate explanation of relative prices because
A) it does not explain why there is a standard percentage markup in most industries. B) it is too simple, and simple theories are rarely as useful as more complex theories. C) the theory is inconsistent with observable relationships between marginal costs and prices. D) people who actually set prices do not describe the process as cost-plus.
If the production of computer chips yields greater technology spillovers than the production of potato chips, the government should
a. encourage the production of computer chips with subsidies. b. discourage the production of potato chips with taxes. c. encourage the production of potato chips with subsidies. d. discourage the production of computer chips with taxes.