According to the graph shown, if the government decides to increase its spending, it is most likely at point:
A. C
B. D
C. B
D. It's impossible to tell without more information.
Answer: C
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The formula for the effect of any change in autonomous spending, ?A, where b equals the MPC is
A) ?Y = ?A [1/(1 - b)]. B) ?Y = ?A [b/(1 - b)]. C) ?Y = ?A [1/(1 + b)]. D) ?Y = ?A [b/(1 + b)].
As a general rule, marginal utility will be less:
a. as less of the good is consumed. b. as more of the good is consumed. c. when average utility is at a maximum. d. only when the good is inferior. e. when satisfaction is less than cost.
Suppose the Swiss government subsidized its watch-making industry, enabling Swiss producers to undersell foreign watch producers. The law of comparative advantage indicates that watch-importing nations would best take advantage of the Swiss subsidization policy by a. setting a tariff high enough to just offset the subsidy granted to the Swiss watch-making industry
b. setting a declining quota on the import of Swiss watches such that the nation's domestic watch-making industry would continue to grow at the same rate as the rest of the economy. c. setting a tariff such that the prices of Swiss and domestic watches to the consumer are equal. d. gladly accepting the subsidy of the Swiss government, making the appropriate adjustment for the resources temporarily displaced from the domestic watch-making industry.
Figure 9.1 represents the market for used bikes. Suppose buyers are willing to pay $200 for a plum (high-quality) used bike and $50 for a lemon (low-quality) used bike. If buyers believe that 50% of used bikes are lemons (low quality), how many lemons (low quality) will be supplied by sellers?
A. 8 B. 12 C. 16 D. 22