Max and Maddy charge people to park on their lawn while attending a nearby craft fair. At the current price of $10, seven people park on their lawn. If they raise the price to $15, they know that only five people will want to park on their lawn. Whether they have seven or five cars parked on their lawn does not affect their costs. From this information it follows that
a. they should leave the price at $10.
b. it does not matter if they charge $10 or $15.
c. they would do better charging $15 than $10.
d. they should raise the price even more.
c
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Which of the following will happen if there is a fall in the supply of credit in an economy without any change in the demand for credit?
A) The real output will fall. B) The labor demand in the economy will increase. C) Its consumption expenditure will increase. D) The real interest rate will fall.
Production efficiency requires that
A) the economy be producing on the PPF but the marginal cost of a good does not need to equal its marginal benefit. B) the economy be producing on the PPF and that the marginal cost of a good equals its marginal benefit. C) the marginal cost of a good equals its marginal benefit but the economy does not need to be producing on its PPF. D) the society be producing at the point of allocative efficiency. E) opportunity costs be minimized.
In the above table, net exports equal a
A) surplus of $200 billion. B) deficit of $200 billion. C) surplus of $100 billion. D) deficit of $100 billion.
Why might IS policies make a country likely to incur a large foreign debt?
What will be an ideal response?