What is utility and how do we use the concept of utility to describe a consumer's preferences?
What will be an ideal response?
Utility is the benefit a person gets from the consumption of goods and services. We use total utility to describe a consumer's preferences by looking at the (total) utility from the consumption of all the goods and services. We use marginal utility to measure the gain in utility from consuming another unit of a good or service.
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If interest rates in the United States rise,
A) the value of the dollar will rise as the foreign investors increase their holdings of U.S. investments. B) the value of the dollar will fall as foreign investors increase their holdings of U.S. investments. C) the value of the dollar will rise as foreign investors sell their U.S. investments. D) the value of the dollar will fall as foreign investors sell their U.S. investments.
Which of the following classical views is (are) accepted by supply-side economists?
a. In the intermediate run, growth of capital, labor, and technology determine output. b. The dislike of government intervention in the economy c. changes in output are primarily driven by changes in the natural rate of output. d. Both a and b. e. all of the above.
If Sam receives a pay cut and the income effect outweighs the price effect on his labor supply decision, he will:
A. work more hours. B. work less hours. C. work the same hours no matter what. D. quit and not work at all.
What might cause a decrease in current supply of a product?
A. A decrease in the price of one of the inputs used to make the product B. An increase in the product's own price C. New information that leads sellers to believe that the product's price will fall in the future D. New information that leads sellers to believe that the product's price will rise in the future