Along a linear consumption function
A. the average propensity to consume rises with income, but the marginal propensity to consume falls with an increase in income.
B. the average propensity to consume rises with a decrease in income.
C. the marginal propensity to consume rises with an increase in income.
D. both the average propensity to consume and the marginal propensity to consume rise with an increase in income.
Answer: B
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If the two goods in an Edgeworth Box are perfect complements for one person and perfect substitutes for the other, then all efficient allocations are such that the first person has the same amount of good 1 as of good 2.
Answer the following statement true (T) or false (F)
The fact that most consumers are unable to describe their preferences in terms of a utility function implies that not all consumer preferences can be represented with utility functions
Indicate whether the statement is true or false
If a firm buys a specialized metal stamping machine that will last 4 years for $125,000 and cannot resell it, the sunk cost is
A) $0. B) $31,250. C) $125,000. D) $93,750.
If the apartment owner decides to fine both the roommates if the apartment is dirty, such that now if neither of them clean they each get a 5 utility loss, what would the new equilibrium be now?
a. John cleans, Joe doesn't b. Joe cleans, John doesn't c. Neither of them clean the apartment d. Both A&B