Any point on the budget constraint
A. Reflects the price of one good divided by the price of another good.
B. Represent a combination of two goods that are affordable.
C. Gives the consumer the highest level of utility.
D. Represents combinations of two goods that yield the same utility.
Answer: B
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Suppose there is currently a shortage in the guitar market. Pick the correct statement
A) Quantity demanded exceeds quantity supplied. B) Sellers could sell all they plan to sell at the current price. C) The price of guitars would tend to increase. D) All of the above are true. E) None of the above is true.
The difference between a perfectly competitive firm's total revenue and its total cost is
A) always positive. B) always negative. C) always zero. D) greatest at the profit-maximizing level of output.
Marginal cost is
A) all the costs of the fixed inputs. B) all the costs of production of goods. C) all the costs that vary with output. D) the change in the total cost resulting from a one-unit change in output.
If the marginal propensity to consume (MPC) is 0.75, what is the value of the multiplier?
A) 4.0 B) 3.0 C) 2.0 D) 1.0