Opportunity costs of using resources contributed by the firm’s owners that are not obtained under contracts calling for payments are known as

Full rationality means that people make use of all available information in determining how to best meet their objectives.

Leader choice theory describes how people use the institution of government for their own interest.

Suppose that Thomas, who formerly worked for someone else, gives up $15,000 in annual salary to open his own bookstore. After one year, his bookstore has explicit costs equal to $65,000 and total revenue equal to $75,000. According to these figures, which of the following is true?

An industry with a single seller of a good is called a monopoly.

Utility measures the constraints facing consumers

What term describes the key traits of a market including the number and size of firms, the extent to which the products of various firms are different or similar, the ease of entry and exit, and the availability of information?

In perfect competition,

Accounting profit

An objective is anything that people want to achieve.

The excess burden of a tax refers to

Full rationality assumes that the choices are made to best meet the individual’s objective, with all information available. Information is obtained and research is conducted to help maximize the consumer’s selection.

Bounded rationality is based upon which of the following?

Rising price levels reduce the buying power of one's nominal income.

Government failure occurs when government action results in a less efficient allocation of resources.

Economic theory assumes that it is the goal of all firms to achieve the highest possible

Which of the following is an example of a fixed cost in the manufacture of automobiles?

All economic theories have objectives, constraints, and choices.

A theory is anything that people want to achieve.

Externalities lead to efficient market performance because they always have beneficial third-party effects.

Costs of goods sold, salaries expense, and utilities expense are known as

The difference between what a consumer is willing to pay and the amount actually paid is

A Giffen good

A public good is a good that, when provided to one person, can be provided to others at zero additional cost.

The demand and supply curves for a product illustrate externalities.

A situation in which there is only one buyer is known as a monopoly

Costs that, once incurred, cannot be recovered are known as

The income effect arises from

Pure economic profit

Public goods lead to efficient market performance because of free riders.

Perfectly-competitive firms are price takers because

Bounded rationality means that people don’t always intend to make choices that best serve their objectives.

Efficient market performance implies that people trade, but that these trades are not always mutually beneficial.

What is the definition of Ockham’s razor?

Ockham's razor stresses simple over the complex, if either will work.

Self-regarding preferences usually are concerned with the material well-being of others.