You just purchased a lawn mower from your next-door neighbor. How can we measure the gains from this transaction?
A. The actual benefit that you receive plus the actual benefit to your neighbor
B. The gains to your neighbor minus the amount that you paid her
C. The gains to you minus the amount that your neighbor paid for the mower
D. The gains to you cancel out the gains received by your neighbor
E. Just the benefit to your neighbor
Answer: A
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Which of the following is not a valid criticism of Fogel's (1964) methodology in his study of railroads?
(a) The canal prices used for 1890 were low. (b) The impact of railroads on financial markets is ignored. (c) The nonpecuniary gains from using railroads could have been considered. (d) The amount of land cultivated would have been reduced.
The best economic theory is the one
a. whose assumptions most closely match reality b. that yields the most accurate predictions c. that most simply represents reality d. that most closely matches the conscious behavior of economic decision makers e. that includes the most details