The marginal benefit of another T-shirt this month to Mary is $15. If the $10 price of a T-shirt reflects its marginal cost to Mary and Mary uses economic reasoning, she:
A. will not buy a T-shirt this month.
B. will not gain anything by buying another T-shirt.
C. will sell the T-shirts she has to others who are willing to pay $10.
D. will buy another T-shirt this month.
Answer: D
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In the above figure, if the real interest rate is 4 percent, then there
A) there is a surplus of loanable funds. B) is equilibrium in the loanable funds market. C) the real interest rate will rise. D) the demand curve for loanable funds will shift rightward.
The central issue in the stabilization policy debate is
A) the effectiveness of monetary policy and fiscal policy. B) the effectiveness of fiscal policy, but not monetary policy. C) the role of money in the inflationary process. D) the location of the sources of economic instability in the economy.
Many argue the poor are getting poorer, at least in a relative sense. Evidence that contradicts this is that
A) household income of the lowest twenty percent of households relative to the highest twenty percent of households has fallen over the last thirty years. B) the official poverty level of income has increased over the years. C) household spending of the lowest twenty percent of households relative to the highest twenty percent of households has held constant over the last thirty years. D) the pretax distribution of income is more equal than the after-tax distribution of income.
Constant cost industries: a. use large portions of the total supply of specialized resources
b. significantly increase the demand for inputs when expanding output, and as a result, input prices rise. c. do not use inputs in sufficient quantities that a change in industry output would affect the prices of the inputs. d. are those in which the cost curves of individual firms shift upwards as industry output expands.