Data on after-tax income and consumption spending for the Adam Smith family are given below:After-tax IncomeConsumption Spending9,00017,20014,00021,20019,00025,20024,00029,200Based on these data, the Adam Smith family has a marginal propensity to consume equal to:
A. 0.8.
B. 0.6.
C. 0.9.
D. 0.75.
Answer: A
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If a 15% increase in price for a good results in a 20% decrease in quantity demanded, the price elasticity of demand is
a. 0.75. b. 1.25. c. 1.33. d. 1.60.
The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and
a. society's preferences. b. the available production technology. c. a fair distribution of the output. d. the available demand for the output.
Curly and Moe are considering living alone or being roommates and splitting the rent for the next twelve months. If they live alone, they each rent a one bedroom, one bath apartment for $500 per month, while if they are roommates, they can split a two bedroom, one bath apartment for $800 per month. The one difficulty they have is that Moe snores very loudly. Curly estimates the cost of poor sleep due to Moe's snoring at $150 per month. Moe could obtain a snore-eliminating device for $50 per month. Curly would be willing to pay ________ per month to eliminate Moe's snoring.
A. up to $150 B. nothing C. exactly $50 D. no more than $100
Widespread behavioral evidence suggests that people:
A. are unable to assess the relative value of gains and losses. B. weigh gains more heavily than losses. C. place equal weight on gains and losses. D. weigh losses more heavily than gains.