The set of goods and services that maximizes the level of satisfaction for each consumer subject to limited income is

Economists and others use economic theory

A. only to analyze situations in which money changes hands. B. as a partial basis for public policy recommendations. C. to confuse their enemies. D. instead of using value judgments concerning important policy issues.

Suppose the government spends $10 billion subsidizing firms producing electricity with wind turbines because these firms are high cost producers. Will the subsidies lead to economic growth and higher income levels?

A) No, the turbines are an inefficient form of producing electricity and therefore the subsidies will increase the opportunity cost of supplying it. B) Yes, because more people will be employed by the firms producing electricity with wind turbines. C) Uncertain, higher income levels will be achieved if the employment of the firms producing electricity with the wind turbines expands; if not, incomes will fall. D) Yes, because the government will be able to finance the subsidies without reducing private sector output.