When consumer spending exceeds disposable income, all of the following are true except
A. Households are dissaving.
B. The APS is negative.
C. The APC is greater than 1.
D. The MPS is negative.
Answer: D
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Perfect competition is a market structure
A) in which any firm would have serious impediments to entry or exit. B) in which individual buyers and sellers have no effect on the market price. C) resulting from individual firms selling highly differentiated products. D) where there is significant regulation and markets are always efficient.
In the short run, if a firm's price is greater than its AVC but less than its ATC, the firm should:
a. shut down immediately because it is generating an economic loss. b. shut down temporarily because it is generating an economic loss. c. continue operating because it is generating an economic profit. d. continue operating even though it is generating an economic loss.
Central planners in command economies
a. generally set production targets for firms. b. always consult consumers on the output of goods they want to consume. c. allow prices to organize the economy's production. d. depend upon the invisible hand to coordinate economic activities.
A professor's students are not getting good grades because of lack of studying. A behavioral economist would say that one reason the students are not studying is that:
A. the professor is not forcing the students to study for the tests. B. they prefer to hang out with friends and watch television and therefore are making an optimal choice. C. we live in a society in which grades in college are not important. D. the cost of studying (not being with friends) would have to be paid now, whereas the benefit (better grades) comes later.