The reason that you don't drink five cups of coffee at breakfast is that
a. the marginal utility of extra cups of coffee eventually diminishes
b. most people cannot afford five cups
c. the total utility of coffee rises as you consume more cups
d. the price of coffee rises as you buy more cups
e. the marginal satisfaction derived from cups of coffee remains constant
A
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The cross elasticity of demand measures the responsiveness of the quantity demanded of a particular good to changes in the prices of
A) its substitutes and its complements. B) its substitutes but not its complements. C) its complements but not its substitutes. D) neither its substitutes nor its complements.
Based on Table 9.2, total savings, private plus public, is equal to
A) 3 percent of GNP. B) 18 percent of GNP. C) 16 percent of GNP. D) 20 percent of GNP. E) None of the above.
If the social cost of producing a good or service exceeds the private cost
A) a positive externality exists. B) the sum of consumer surplus and producer surplus is maximized. C) the market achieves economic efficiency. D) a negative externality exists.
The marginal cost of pollution abatement is graphically illustrated by
A. a vertical curve. B. a downward sloping curve. C. a horizontal curve. D. an upward sloping curve.