Which of the following is TRUE?
A. MPC * MPS = 1
B. MPC = 1+ MPS
C. MPC = 1 - MPS
D. MPC / MPS = 1
Answer: C
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When a producer has a comparative advantage in producing a good, it means the producer:
A. can produce more of that good than others with the same number of workers. B. has the ability to produce the good at a lower opportunity cost than others. C. has no reason to trade with others. D. is efficient in production.
In the early 1970s, OPEC's goal was to
a. decrease the world-wide price of oil so that the quantity demanded increased, thus raising total revenues for OPEC members. b. increase the world-wide price of oil by reducing the quantity of oil supplied. c. increase the world-wide price of oil by increasing the quantity of oil supplied, thus raising total revenues for OPEC members. d. decrease the world-wide price of oil so that quantity demanded increased.
Because the smallcountry monopolist loses the ability to control the market price, consumers enjoy more quantity, competitive prices, and:
a. a bonus because the foreign goods are of higher quality. b. a loss because the monopoly loses profits. c. higher consumer surplus because the monopolist's producer surplus is reduced. d. a loss because now unions have less power than before.
If an incumbent faces an identical potential entrant with no costs of entry, the incumbent will
A) produce the Cournot duopolist level of output B) produce the Stackelberg leader level of output C) set price equal to marginal cost D) shut down