The economy has been compared to a supertanker on the ocean to make the point that
A) the larger the economy, the less it is influenced by other economies (the weather).
B) it takes time for a policy change to overcome the economy's momentum and change its direction (as in steering an immense ship).
C) a random shock affects all parts of the economy in the same way (as all of a ship rises or falls together with the waves).
D) the larger the economy, the worse it is for the rest of the world when it goes into a recession (there is enough oil in a supertanker for a spill to stretch across the ocean).
B
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How does a person's perception of whether a good is a necessity or a luxury affect his or her purchases of it?
(A) People will not purchase necessities if the price increases. (B) A good that is perceived as a necessity will be purchased even if the price rises. (C) People who have a lot of money will buy goods even if they think they are a luxury. (D) A good that is perceived as expensive will no longer be considered a necessity.
The halfway-point between the buyer's valuation and the seller's opportunity cost is:
a. sometimes a focal point. b. where the two parties invariably agree to transact. c. outside the core. d. inside the utility possibility frontier.