Two students are walking by a department store window that has on display a $400 dress. The English major declares, "I want that dress but can't afford it." The economics major replies, "No, you don't." Explain the logic of this reply
This is a version of the old economics joke that never elicits a student chuckle. The question addresses how economists fail to distinguish between "wants" and "needs." Anyone who wants something, in an economic sense, will engage in activities to acquire it. The student could take a second job and earn enough money for the dress in three weeks. By not making an effort to acquire the dress, the student reveals that she values other goods, and/or her time, more than she does the dress..
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The average product curve
A) initially falls then rises. B) rises as average variable cost increases. C) initially rises and then falls. D) shows how productivity changes as output changes. E) intersects the marginal cost curve when the average product curve is at its maximum.
Incomplete property rights create transactions costs because
a. any party wanting to use the disputed resource does not have a fixed group with which to bargain. b. the use of the disputed resource cannot be fully monitored by the government. c. no one can prevent people from using the disputed resource for free. d. others may receive a higher value from the disputed resource that those who own the property right to it.