"I Have Been Making Furniture for 27 Years

question 398

Multiple Choice

"I have been making furniture for 27 years. I have never heard of either marginal cost or marginal revenue. Fancy economic theories mean nothing to me. I just know how to do well in business. Whenever I can sell something for more than it cost me to produce it, I make it, and whenever I can't sell it for enough to cover my cost, I don't. That's how I stay in business and earn income for my family. Common sense and watching the market are good enough for me." For producers like this, economic models

• A) accurately describe their behavior and allow predictions to be made as to how they will respond to changes in market conditions.
• B) indicate nothing about the behavior of such producers.
• C) will generally only apply if the person has a college education.
• D) do not apply because the producers do not understand the terminology.