What is the likely effect in an economy when total spending is too high?
a. inflation
b. tax decreases
c. unemployment
d. efficiency
a. inflation
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Oscar makes purchases of an existing product (X) such that the marginal utility of the last unit he consumes is 10 utils and the price is $5. He also tries a new product (Y) and the marginal utility of the last unit he consumes is 8 utils and the price is $1. The equal marginal principle suggests that Oscar should
A. increase his consumption of product Y and decrease his consumption of product X. B. increase his consumption of product X and increase his consumption of product Y. C. decrease his consumption of product Y and decrease his consumption of product X. D. increase his consumption of product X and decrease his consumption of product Y.
? If a consumer is currently at Point E on Figure 5-13, she will
A. choose to move to the combination at C to make herself better off. B. choose to move to the combination at D to make herself better off. C. reduce expenditures to make herself better off. D. stay at Point E, since that combination is the cheapest alternative to be on indifference curve U1.
If production displays economies of scale, the long-run average cost curve is
A) downward sloping. B) below the long-run marginal cost curve. C) upward sloping. D) above the short-run average total cost curve.
Which of the following is the best definition of economics?
a. Economics is the study of how to manage corporations to generate the greatest return on shareholder investment. b. Economics is the study of how to manage city and country government to generate the greatest good to its citizens. c. Economics is the study of how society chooses to allocate its scarce resources. d. Economics is the study of how to track revenues and costs within a business.