Rick finds a great Internet deal on an all-inclusive vacation rental in the Tropics for $1200, and immediately places a $1000 nonrefundable deposit on it. He later learns that the dates he planned to go are right in the middle of hurricane season, and it is likely to be miserable and potentially dangerous weather the entire time. Rick decides he cannot waste the $1000 and takes the trip anyway. While sitting in the rain, miserable, Rick realizes he should have:
A. ignored his sunk cost of $1200 and skipped the trip.
B. ignored his sunk cost of $1000, and skipped the trip.
C. hired a lawyer for $1000 to go to court and try to get his deposit back.
D. hired a lawyer for $1000 to sue the travel agency.
B. ignored his sunk cost of $1000, and skipped the trip.
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Joe and Fred are economists. Joe thinks that the wealthiest 10% of the US population should be taxed a rate higher than the rest of society because they can better afford it. Fred thinks that everyone should be taxed at the same rate because that is the fairest scenario and the wealthy should not be penalized for their success. In this example, Joe and Fred
a. disagree about the validity of a positive theory. b. have different normative views about tax policy. c. must both be incorrect because tax policy is never that simple. d. None of the above is correct.
The model of aggregate demand and aggregate supply is nothing more than a large version of the model of market demand and market supply
a. True b. False Indicate whether the statement is true or false