If the marginal utility of a product exceeds its MC, we would want, on efficiency grounds, to
A. increase production.
B. decrease production.
C. leave production constant.
D. One cannot tell without knowing the price.
Answer: A
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The natural rate hypothesis argues that the economy will:
a. self-correct to the natural rate of inflation. b. require expansionary fiscal policy to reach the natural rate of unemployment. c. self-correct to the natural rate of unemployment. d. require expansionary monetary policy to reach the natural rate of unemployment.
Monopolistic competitors have _______ rivals who produce _________ goods and services.
A. no; identical B. many; identical C. many; close substitute D. None of the choices are correct.
Assume that the current demand for goods DOES depend on expectations in the IS-LM model. A monetary expansion in the current period will cause a rightward shift in the IS curve if
A) current and expected future real interest rates are positively related. B) current and expected future real interest rates are negatively related. C) current and expected future real interest rates are unrelated. D) the central bank is expected to reverse any current movements in monetary policy in the future. E) monetary policy cannot affect, directly or indirectly, the position of the IS curve in the current period.
During the 2016 Summer Olympics in the city of Rio, some Rio residents rented rooms to visitors. This behavior
A) helped reduce the shortage of hotel rooms caused by the high demand during the Olympics. B) reduced the demand for tickets to the Olympics since many local residents left town while they rented out space in their homes. C) helped raise the prices that visitors paid for hotel rooms in Rio. D) raised the demand for hotel rooms in Rio and should have been prevented by the city of Rio.