Evaluate the following statement. "As long as I am still enjoying this candy I am going to keep buying and eating more of it"
What will be an ideal response?
This confuses marginal and total utility. While it might be true that he is still receiving positive marginal utility from eating more of the candy it might not be the most rational thing for him to do in order to maximize his total utility. That is, he might be better off redirecting some of this expenditures toward another good that has a higher marginal utility per dollar.
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Average labor productivity is the
A) amount of workers per machine. B) amount of machines per worker. C) ratio of employed to unemployed workers. D) amount of output per worker.
The cost of consumption has two components:
a. the substitution effect and the income effect b. the law of demand and the law of diminishing marginal utility c. the price effect and the income effect d. the money price and the time price e. saving and taxes
The resource market is important from a macroeconomic perspective because
a. it coordinates the allocation of productive resources and determines the costs of production. b. it determines the interest rates faced by borrowers and lenders. c. inflation rates are set in the resource market by the government. d. resource prices determine the position of the long-run aggregate supply curve.
Setting performance goals based on historical data and past performance creates:
A. a ratchet effect. B. a compensating differential. C. opportunism. D. the horizon problem.