Refer to Figure 18.1. Which of the following would most likely cause a shift from AD1 to AD2?
A. A decrease in the money supply through open market operations.
B. An increase in transfer payments because of a recession.
C. A decrease in government spending.
D. An increase in the tax rate.
Answer: B
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A bottle of wine costs $8 and a quiche costs $5. At Robert’s present levels of consumption, he spends all his income and receives marginal utility of $10 from the last bottle of wine and marginal utility of $4 from the last quiche. To maximize his total utility, Robert should
A. buy less wine and more quiche. B. buy more wine and less quiche. C. spend all of his money on wine. D. change his spending pattern until he buys 8/5ths as much wine as quiche.
Absentee landowners characterize the agrarian system of
(a) Asia. (b) Latin America. (c) Sub-Saharan Africa. (d) all of the above.
If the fixed costs are relatively large, a relatively good approximation of the correct transfer price is
a. average costs b. average fixed costs c. average variable costs d. the market price
When comparing perfect competition and monopoly, a major assumption made is that
A. consumers only care about the price of the good and not whether the seller is a monopoly or not. B. the costs of production are the same under monopoly as under perfect competition. C. the monopolist can make an above normal rate of return. D. the monopolist faces a downward sloping demand curve.