Which of the following is often referred to as the basic postulate of economics?
a. Individuals act only out of selfish motives.
b. Incentives matter--individuals respond in predictable ways to changes in personal costs and benefits.
c. The accuracy of the assumptions is the best test of an economic theory.
d. The value of a good is objective; it is equal to the cost of producing the good.
B
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List the three major sources from which households derive their incomes
What will be an ideal response?
If a firm buys some labor in a competitive market and some labor as a monopsonist, the firm is most likely to
A) pay the same wage to both types of labor. B) pay a lower wage to the labor purchased in the competitive market. C) pay a higher wage to the labor purchased in the competitive market. D) not exercise any of its monopsony power.