Increases in autonomous spending have an expansionary effect and make ________ levels of real income consistent with a given interest rate

Best Lights wants to prevent Bright Lights from entering the light bulb market. If Best Lights advertises that it will always undercut any competitor's price, the effect of advertising ________ Best Lights' profits due to its cost and ________ Best Lights' profits due to a(n) ________ in its demand.

A) decreases; increases; increase B) decreases; decreases; decrease C) increases; increases; increase D) decreases; decreases; increase

Does the principle of optimization imply that people always make the best choices?

A. Yes, it is a good approximation for the decisions people make. B. No, because people do not have full information. C. Yes, because people make perfect calculations. D. No, because people are irrational. E. It cannot be tested without more data.