Suppose that Mick and Cher are the only two members of society and are willing to pay $10 and $8, respectively, for the third unit of a public good. Also, assume that the marginal cost of the third unit is $17. We can conclude that:
A. the third unit should not be produced.
B. the third unit should be produced.
C. zero units should be produced.
D. 4 units should be produced.
Answer: B
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A person buys a bond with a face value of $10,000 for $9,325. Each year until the maturity date the bond buyer receives $750 from the issuer of the bond. The yield on the bond is
A) 8.04 percent. B) 7.5 percent. C) 10.0 percent. D) 6.75 percent. E) There is not enough information to answer the question.
Explain the way an increase in supply with demand remaining constant and a decrease in supply with demand remaining constant are different.
What will be an ideal response?
Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.
a. True
b. False
Indicate whether the statement is true or false
When total expenditures exceed the economy’s potential GDP, the proper fiscal policy is to
A. increase transfer payments to the poor and elderly. B. cut personal income tax rates. C. decrease government purchases. D. increase purchasing power.