Economic Theory

question 1

Multiple Choice

Economic theory

• A)expresses normative values
• B)invents imaginative and interesting stories
• C)predicts the behavior of a specific economic decision maker after an economic change
• D)predicts the average behavior of a group of similar economic decision makers after an economic change
• E)uses only perfect and complete information

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Definitions:

Income

The money or other benefits received, usually in return for labor, services, or investment, constituting the basis for consumption and savings.

MRP Curve

The Marginal Revenue Product curve, representing the additional revenue generated by employing one more unit of a resource or factor of production.

Labor Demand

The complete number of employees that employers are prepared and capable of hiring at a certain salary level during a specific timeframe.

Profit

The financial gain achieved when the revenue from business activities exceeds the expenses, costs, and taxes needed to sustain those activities.