When some people do not act rationally, others can profit from that irrationality.
Answer the following statement true (T) or false (F)
True
Irrational behavior means that something was not maximized, and the extra amount not obtained by that behavior allows for opportunities for profit.
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A fifty cent tax imposed on a pack of cigarettes is _____
a. a unit tax b. an ad valorem tax c. a retail sales tax d. relatively cheap
In a fractional-reserve banking system with no excess reserves and no currency holdings, if the central bank buys $100 million worth of bonds,
a. reserves and the money supply increase by less than $100 million. b. reserves increase by $100 million and the money supply increases by $100 million. c. reserves increase by $100 million and the money supply increases by more than $100 million. d. both reserves and the money supply increase by more than $100 million.