John loves to travel. He would never—but absolutely never! —turn down the opportunity to go on a trip. This means that, for John,
a. the total utility of travel always increases
b. marginal utility of travel never decreases
c. the law of diminishing marginal utility does not apply to travel
d. marginal utility of travel is always zero
e. for every next trip he takes, consumer surplus increases
A
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In the short run, why would a firm in a perfectly competitive market shut down production if the prevailing market price falls below the lowest possible average variable cost?
a. At that point (economic) profit is zero. b. Below that point average revenue becomes less than marginal revenue. c. Below that point marginal revenue becomes insufficient to pay for avoidable average variable cost. d. Below that point other firms with similar cost will find it profitable to enter the market and take away demand from the existing firms.
The existence of differences between the average earnings of men and women: a. proves the existence of discrimination
b. may be partially due to factors other than wage discrimination. c. proves that men on average invest more in human capital than do women. d. indicates that men are on average smarter than women are.
A decrease in the price of a good will cause a decrease in the firm's demand for labor
Indicate whether the statement is true or false
Suppose that there are two countries (Ireland and Belgium) negotiating the government debt criteria for the Eurozone. Ireland has a high ratio of government debt to GDP; Belgium has a low ratio of debt to GDP. Which country is likely to prefer a higher inflation target?
A) Belgium, because the real value of its government debt will approach zero faster than Ireland's over time B) Ireland, because higher inflation will cause larger absolute reductions in the real value of its government debt than in Belgium C) It makes no difference because high rates of inflation will have proportional effects on the real debt of both countries. D) both, because each wants to see its real government debt decline