"Mediocre Economists Often Consider Only the Immediate Apparent Effects of a Change

question 83

Multiple Choice

"Mediocre economists often consider only the immediate apparent effects of a change, whereas a good economist will also consider effects that may only become observable over time." This statement most clearly emphasizes

• A) the fallacy of composition.
• B) economizing behavior.
• C) the importance of secondary effects.
• D) the fact that association is not causation.

Understand how changes in input prices affect firms' resource allocation decisions.

Analyze the relationship between labor demand and the marginal revenue product of labor.

Understand the concept of labor demand elasticity and how it responds to wage changes.

Identify the factors that affect the elasticity of resource demand, including substitutes and proportion of total costs.

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Definitions:

8% Return

An investment objective or outcome where the investor aims to achieve an annual return of 8 percent on the invested principal.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.

Annual Payment

A payment made once a year, often related to loans, insurance policies, or subscription services.

Investment

The allocation of resources, usually capital, in the expectation of generating an income, profit, or capital appreciation.