The logical principle for maximization can be stated as follows:
A) Do it if it feels good.
B) Do it if the benefit from doing it is greater than the cost of doing it.
C) Do it unless it's illegal, immoral, or fattening.
D) Do it whenever the marginal benefit equals the marginal cost.
B
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A good example of central planning at work in the U.S. is:
A. McDonald's fries being the same everywhere. B. unions working with businesses to establish wages. C. New York City's rent control program. D. car manufacturers establishing suggested retail prices.
Suppose that Tom bought a bike from Helen for $195. If Helen's reservation price was $185, and Tom's reservation price was $215, the total economic surplus from this transaction was:
A. $215 B. $195 C. $185 D. $30
Which of the following is correct?
A. Private saving equals national saving plus public saving. B. National saving equals private saving plus public saving. C. National saving equals public saving minus private saving. D. Public saving equals national saving plus private saving.
Assume that the substitution effect dominates the income effect. When the government raises tax rates, after-tax real wage rates
A. rise, consumption increases, and labor supply increases. B. fall, consumption increases, and labor supply decreases. C. fall, consumption decreases, and labor supply increases. D. fall, consumption decreases, and labor supply decreases.