If a college student stays home and watches a Netflix movie for $2 rather than going out to a $15 movie, this is an example of the
A) utility effect.
B) value effect.
C) substitution effect.
D) income effect.
Answer: C
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A purchase of foreign assets by a central bank has the same impact on the monetary base as:
A) an open market purchase of government securities B) an open market sale of government securities C) an increase in the discount rate D) a reduction in the interest on reserves
Suppose that Canadian farmers can grow wheat more cheaply than can U.S. farmers. In the interest of efficiency, what is the desirable outcome?
A) Allow the Canadian farmers to sell their wheat for a lower price. B) Pass a law in Canada mandating a minimum price for wheat equal to what is charged by U.S. farmers. C) Pass a law in the United States mandating a maximum price for wheat equal to what is charged by Canadian farmers. D) Have U.S. citizens boycott Canadian wheat.
A profit-maximizing monopolist sets
A. his or her price where MC = MR. B. his or her output where MC = MR. C. his or her price where MR > MC. D. his or her output where P = MC.
By providing free garbage removal, a community
A. discourages activities that produce detrimental externalities. B. disincentivizes citizens from recycling. C. leads citizens to throw out less garbage than is socially optimal. D. raises the opportunity cost of recycling.