Assume a perfectly competitive firm is producing a level of output at which MR < MC. What will happen as the firm moves to its profit-maximizing equilibrium?
A) Marginal revenue will rise.
B) Marginal revenue will fall.
C) Marginal cost will rise.
D) Marginal cost will fall.
D
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Economic growth occurs when there is
A) lower taxes on individuals. B) growth in government spending. C) growth in technology that increases productivity. D) more environmental regulation.
Suppose a budget line is drawn between pizza, on the horizontal axis, and tacos, on the vertical axis. How does a change in the price of a pizza affect the budget line?
What will be an ideal response?
The largest component of U.S. federal spending that contributes to the U.S. government budget deficit is
A) entitlements. B) military spending. C) interest expenses. D) salaries of government employees.
The CPI and an Individual's Cost of Living
- Why does the mix of goods that you buy determine how well the CPI explains the effect of inflation on the purchasing power of your income?
- Why does geographical location have an effect on how well the CPI measures changes in your cost of living?
- Suppose that the price of heating oil rises at twice the rate of inflation. For which portions of the country would the CPI overstate the effect of inflation? For which portions of the country would the effect of inflation be understated?