The theory of bounded rationality is consistent with which of the following?
A. It is irrational to follow principles such as "follow the leader."
B. It always pays to be irrational.
C. Our rationality depends on rules of thumb such as "you get what you pay for."
D. None of our decisions are rational.
Answer: C
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(Consider This) Which of the following methods is used by farmers to "hedge" against short- run price and output fluctuations?
A. Securing prices for their output in the futures market. B. Purchasing crop revenue insurance to insure against natural disasters. C. Leasing land to other farmers in return for stable rent payments. D. All of these risk-management techniques are used.
A firm's average total cost is equal to the firm's:
A. total cost divided by its level of output. B. level of output divided by its variable cost. C. marginal cost divided by its level of output. D. total cost divided by its total revenue.