Refer to the information provided in Figure 6.5 below to answer the question(s) that follow.
Figure 6.5Refer to Figure 6.5. Molly's budget constraint is EF. If her income decreases and the price of CDs increases, her new budget constraint could be
A. CD.
B. BD.
C. AD.
D. Both B and C are correct.
Answer: D
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As long as the marginal utility per dollar from pizza is greater than the marginal utility per dollar from soda, then to maximize utility a consumer will buy
A) more soda to equalize the marginal utility per dollar between soda and pizza. B) less pizza and less soda. C) more pizza and less soda. D) equal amounts of pizza and soda.
All of the following are reasons why China is unlikely to maintain high enough rates of productivity growth to catch-up with the standard of living in the United States except
A) because of the low birth rate in China, the labor force will soon decline. B) much of China's growth is likely due to the transition from a centrally-planned economy to a market economy. C) the Chinese migration of rural workers to more productive urban jobs. D) the United States invests more in research and development. than does China.
The Coase theorem states that
A. positive externalities are directly related to the weather-the better the weather, the more positive externalities. B. in the case of trivial or zero transaction costs, negative externalities are more likely to appear. C. when transaction costs are high, positive externalities will be minimized. D. in the case of trivial or zero transaction costs, the property rights assignment does not matter to the resource-allocative outcome.
A key assumption of the Keynesian model of macroeconomics is a fixed _____
a. interest rate b. price level c. exchange rate d. growth rate e. unemployment level