Richard is consuming X and Y so that he is spending his entire income and MUx/Px = 6 and MUy/Py = 10. To maximize utility, he should
A. continue to consume the same amount of X and Y since he is already maximizing utility.
B. consume more X and less Y.
C. consume less of both X and Y.
D. consume less X and more Y.
Answer: D
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If the market in the figure above changes from perfectly competitive to a profit-maximizing single-price monopoly, the amount of the gain in producer surplus is the area ________
A) ABH B) BFGH C) ACG D) BDEH E) ACE
Under a system of fixed exchange rates where the foreign exchange market is in equilibrium and neither country has a balance-of-payments deficit or surplus, an increase in imports of French goods by Japanese consumers, ceteris paribus, would result in a
A. Balance-of-payments deficit for Japan. B. Balance-of-payments surplus for Japan. C. Balance-of-trade deficit for France. D. Market surplus of francs.
Khalil closes his ice cream stand for two days to attend a wedding. As a result, he can reasonably expect his firm’s short-run ______.
a. fixed costs to increase b. marginal costs to decrease c. total cost to increase d. variable costs to decrease
When aggregate demand shifts because of expansionary fiscal policy, then the impact of the fiscal policy for:
A. increasing GDP will be weakened if crowding out occurs. B. decreasing GDP will be strengthened if crowding out occurs. C. increasing GDP will be weakened by an increase in the price level. D. increasing GDP will be strengthened by the decrease in the price level.