Suppose that the extra cost to Tim of a third glass of soda is zero because he's at a restaurant that gives free refills. According to the Cost-Benefit Principle Tim should:
A. drink a third glass of soda if the extra benefit of doing so is positive.
B. not drink a third glass of soda.
C. drink a third glass of soda.
D. drink a third glass of soda if his total benefit from drinking soda is positive.
Answer: A
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Intermediate inputs are
A) goods used for household consumption only. B) goods used for government consumption only. C) goods purchased by one business from another to use in production. D) goods purchased by foreigners. E) raw materials used in the production process.
Which of the following cannot be controlled precisely by the Federal Reserve?
A) Government securities held by the New York Federal Reserve B) The discount rate C) Reserve requirement ratios D) Total bank reserves
The elasticity of demand for employees is -0.50. It is also estimated that the existing minimum wage (price floor) has increased the raise the wage by 25% above equilibrium wage
How much would the employment change if the price floor was eliminated? A) Employment would decrease by 12.5%. B) Employment would increase by 12.5%. C) Employment would decrease by 25%. D) Employment would increase by 25%.
Refer to the graph shown. Given the increase in the price level in the graph, it is likely that the multiplier effect:
A. reduces the quantity of aggregate demand by Y0 ? Ye. B. raises the quantity of aggregate demand by less than Y0 ? Ye. C. raises the quantity of aggregate demand by Y0 ? Ye. D. reduces the quantity of aggregate demand by less than Y0 ? Ye.