Suppose that when disposable income increases by $2,000, consumption spending increases by $1,500. Given this information, we know that the marginal propensity to consume (MPC) is
A. 0.75.
B. 0.25.
C. 4.
D. 1.33.
Answer: A
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If the marginal revenue product (MRP) of labor is less than the wage rate
A. less labor should be employed. B. the firm is making profits. C. the firm is incurring losses. D. more labor should be employed.
Calculate the price elasticity of supply for the following goods. Also comment on the elasticity in each case
a) When the price of a good is $100, 200 units are supplied. But when the price increases to $300, 220 units are supplied. b) When the price of a good is $50, 50 units are supplied. But when the price decreases to $30, 10 units are supplied.
When entry barriers into a market are high,
a. a monopolist will always be able to make an economic profit. b. rival firms will enter and drive price down to the level of per-unit costs if the firms in the market are making economic profit. c. entry into the market will not take place, at least not quickly, even if the firms currently in the market are making economic profits. d. the producers in the market will have little or no incentive to produce efficiently (at a low cost).
The economy experiences a decrease in the price level and an increase in real domestic output. Which is a likely explanation?
A. Consumer incomes and the quantity of labor have decreased B. Business costs and wage rates have decreased C. The prices of imported resources have increased D. National income abroad has increased