A student enters a McDonald's fast-food restaurant. He orders the first Big Mac. He consumes it within 3 minutes. He then orders a second Big Mac and consumes it in 10 minutes. He eats only half of the third one in 18 minutes and throws away the rest
The store manager offers him the fourth for free. The student says: "No thanks." For the student described above, we can say that
A) diminishing marginal utility set in only after he had consumed the second Big Mac.
B) diminishing marginal utility began as soon as he had eaten the first Big Mac.
C) diminishing marginal utility did not occur, he simply wanted to quit eating.
D) the law of diminishing marginal utility only applies to durable goods.
Answer: B
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A) a put option. B) a call option. C) a futures contract. D) a mortgage-backed security.
It is sometime useful to view each step in the supply chain as a(n)
A) single market. B) integrated process. C) horizontal process. D) vertical process.
When individuals trade in open markets,
a. Pareto improvements occur b. Pareto improvements cannot occur c. the markets are economically efficient d. the markets are Pareto efficient e. there are barriers to trade
In explaining the downward-sloping aggregate demand curve, the net export effect is:
a. When a nation's price index falls, international capital flows are attracted to it, which causes the net exports to rise. b. When the price index falls, net exports fall because a nation's exports become relatively cheaper and its imports become relatively more expensive. c. When the price index falls, the real money supply rises, causing the real risk-free interest rate to fall, and consumption and real investment to rise. d. When the price index falls, net exports rise because a nation's exports become relatively cheaper and its imports become relatively more expensive. e. When the price index falls, central banks intervene to bring prices back to where they were, causing net exports to rise.