Maria buys a cup of coffee every day after her economics class. The first cup of coffee always tastes wonderful. The second does not taste quite as good as the first. The third does not taste quite as good as the second. Maria is experiencing
A. irrational behavior.
B. the law of diminishing marginal utility.
C. the substitution effect.
D. the income effect.
Answer: B
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In order to study how changing price affects consumer decisions, we must assume all other factors, such as income and the prices of other goods are constant. This assumption is best know as
A) rationality. B) ceteris paribus. C) normative economics. D) behavioral economics.
When investment occurs in developing nations
A) investors hope to gain significant returns on their investment and residents gain higher rates of economic growth. B) higher rates of economic growth are usually not achieved. C) significant levels of pollution usually occur. D) government politicians usually benefit from the illegal payments made to secure the investment.
Just over ____ percent of the unemployed in the United States can qualify for benefits.
A. 30 B. 40 C. 50 D. 60
Classical economists would cite all of the following as reasons why the government cannot smooth out the business cycle except that
A. political constraints on policy actions prevent the government from carrying out effective policies. B. time lags between the onset of a recession and the implementation of effective countermeasures make anti-recessionary macroeconomic policies impractical. C. the government has imperfect knowledge of the economy. D. only productivity shocks can cause real fluctuations in the business cycle.