In order to be successful in a market economy, entrepreneurs must
What will be an ideal response?
combine resources in a manner that increases their value.
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If a consumer is consuming a combination of goods and services on his budget line, has the consumer allocated his or her entire budget?
What will be an ideal response?
When and under what circumstances is intervention in international trade justified on market correction grounds? What preconditions would have to be met from the government side for there to be a reasonable likelihood of success?
What will be an ideal response?
Suppose that Family A borrows money when its car breaks down and saves money when the wife receives a holiday bonus from her employer. Suppose that Family B borrows money to buy elaborate birthday presents for the children and spends the husband's holiday bonus on a vacation to Florida. Which of the following is correct?
a. Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on transitory income. b. Family A's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income. Family B's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income. c. Family A's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income. Family B's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income. d. Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on permanent income.
The answer is: 1/(1 - MPC). What is the question?
A) What is the marginal propensity to save? B) What is the efficiency wage model? C) What does consumption equal if the economy is in equilibrium? D) What is the multiplier? E) What does disposable income equal if the economy is in equilibrium?