If the MPC is 0.95, then a $10 million increase in disposable income will
A) increase consumption by $200 million. B) decrease consumption by $105 million
C) increase consumption by $9.5 million. D) increase consumption by $950 million.
C
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While waiting in line to buy two tacos at 75 cents each, and a medium drink for 80 cents, Jordan notices that the restaurant has a value meal containing three tacos and a medium drink all for $2.50. For Jordan, the marginal cost of purchasing the third taco would be
What will be an ideal response?
The concept of vertical equity is that
A. income should be taxed instead of property. B. property should be taxed instead of income. C. there should be little movement up or down the social scale. D. persons who are unequal should be treated unequally.
A purely self-interested diner is more likely to tip:
A. whenever he can afford to. B. always, to assure good service. C. only when dining in a restaurant at which he often eats. D. only when dining in a very up-scale restaurant.
Refer to the diagram in which the downsloping lines are budget lines and I 1 , I 2 , and I 3 comprise an indifference map. The combinations of products M and N indicated by points 1, 2, and 5 are such that:
A. point 2 yields more utility than either 1 or 5.
B. points 1 and 5 yield more utility than point 2.
C. points 1, 2, and 5 yield equal amounts of utility.
D. the levels of utility associated with these three points cannot be compared.