Question

QUESTION 19

1. If I predict that dinner at a restaurant is going to cost me $22.35, what is that an example of?

   		over-optimism
   		over-confidence
   		over-precision
   		over-eating

QUESTION 20

1. If people have rational expectations, they

   		are correct at least 50% of the time
   		do not make systematic and correctable errors in predictions
   		sometimes overestimate, but never underestimate, economic variables
   		revise their expectations upward when their predictions are too low

QUESTION 21

1. If the firm's marginal cost is $10 and in the short run capital is fixed, with wages for workers at $40 per hour, what must the worker's marginal product per hour be?

   		$10
   		$40
   		4
   		400

QUESTION 22

1. If the Marginal Product of capital is 6 and the Marginal Product of labor is 3; the prices of capital and labor are $10 and $2 respectively. What should the manager do?

   		Increase output
   		Substitute in more labor for less capital
   		Pay workers less
   		Substitute in more capital for less labor

Answer 1

19. Over-precision

Explanation: In over-precision, one attempts to predict future too accurately.

20. Do not make systematic and correctable errors in predictions

Explanation: In rational expectations, people avoid making past mistakes.