Can phenomena as diverse as pencil production and highway traffic be legitimately studied by economists?
A) No. One is properly in the field of business, the other in city planning.
B) No. Although production is properly in the field of economics, highway traffic is only properly studied by planners and environmentalists.
C) Yes. Both phenomena emerge from choices of individuals with limited information.
D) Yes. Both phenomena emerge in the market system without any human intervention.
C
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Referring to Situation #1 suppose that you decide that you have to fire the first and the third executive without hiring any replacements
What would be the opportunity cost of the second executive's work? Explain why your answer is not the same as in the question above.
The absence of money illusion means that
A) as real income doubles, the demand for money doubles. B) as interest rates double, the demand for money doubles. C) as the money supply doubles, the demand for money doubles. D) as the price level doubles, the demand for money doubles.