At which point is society producing the most output possible with the available resources and technology? (See Figure 1.1.)
A. A.
B. B.
C. C.
D. D.
Answer: B
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Suppose that when disposable income increases by $2,000, consumption spending increases by $1,500. Given this information, we know that the marginal propensity to consume (MPC) is
A) .25. B) .75. C) $1,000/$750 = 1.33. D) 1/.25 = 4.
Suppose Winston's annual salary as an accountant is $60,000, and his financial assets generate $4,000 per year in interest. One day, after deciding to be his own boss, he quits his job and uses his financial assets to establish a consulting business, which he runs out of his home. To run the business, he outlays $8,000 in cash to cover all the costs involved with running the business, and earns revenues of $150,000. What costs would be considered when calculating accounting profit?
A. The opportunity cost of his job and interest forgone of $64,000, and the explicit cost of $8,000 B. The implicit cost of the interest forgone of $4,000 and the explicit cost of $8,000 C. The explicit cost of $8,000 D. The implicit cost of his job of $60,000 and the opportunity cost of forgone interest of $4,000
During the twentieth century, the U.S. farm sector experienced
A) large increases in its ability to produce output. B) relatively little improvement in its ability to produce output. C) a marked decrease in its ability to produce output. D) relatively stable demand for its output. E) increasing relative prices for its output.
In a graph of the production possibilities curve, the two axes of the graph indicate the:
A. Prices of the two products that a nation can produce B. Maximum quantities of the two resources that a nation possesses C. Price of the products on the vertical axis, and quantities on the horizontal D. Quantities of the two products that a nation can produce