Tony notes that an electronics store is offering a flat $20 off all prices in the store. Tony reasons that if he wants to buy something with a price of $50, then it is a good offer, but if he wants to buy something with a price of $500, then it is not a good offer. This is an example of:
A. inconsistent reasoning because prices are sunk costs.
B. inconsistent reasoning; saving $20 is saving $20.
C. rational choice because saving 40 percent is better than saving 4 percent.
D. the proper application of the Cost-Benefit Principle.
Answer: B
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Which of the following statements is FALSE?
A) An increase in income causes an increase in the demand for a normal good. B) An increase in income causes a decrease in the demand for an inferior good. C) A decrease in income causes the demand curve for a normal good to shift to the left. D) An increase in income causes the demand curve for an inferior good to shift to the right.
Which of the following statements about wage setting is true?
A) most workers in the U.S. have their wages set by formal contracts. B) formal contracts play a more important role in Japan and Western Europe than in the United States. C) the minimum wage in the U.S. is about 75% of the average wage. D) all of the above