"The resources now going into the War on Terrorism and into improved airport security would save more lives if they were invested in medical research." This statement most clearly reflects which of the following?
a. The best test of an economic theory is its ability to predict.
b. There is no such thing as a free lunch--the use of scarce resources always has an opportunity cost.
c. selfishness; if people were not selfish, we could have more of everything.
d. The value of goods can be determined objectively.
B
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Which economic question does the decision to produce butter instead of guns answer?
a. What to produce? b. How to produce? c. For whom to produce? d. Who has a comparative advantage in gun production? e. Who has an absolute advantage in butter production?
When policymakers are considering a particular action, they can use consumer surplus as a(n)
a. objective measure of the benefits to buyers as determined by policymakers. b. measure of the benefits to buyers as the buyers perceive them. c. potentially flawed measure of the benefits to buyers if the buyers are not rational. d. Both b) and c) are correct.