Why do households hold less in checking accounts then they once did?
What will be an ideal response?
As wealth has increased, households have been better able to hold other assets, such as CDs, where their money is tied up for a while but on which they earn higher interest. Also, the increased availability of money market mutual funds have attracted funds from households, since they still allow limited checkwriting and pay higher interest.
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Average cost is the cost of producing the next unit.
Answer the following statement true (T) or false (F)
An increase in autonomous consumption means that
A) the consumption function shifts down. B) the consumption function shifts up. C) the consumption function becomes steeper. D) the consumption function becomes less steep.
The host at a party offers Justin a sixth beer. Justin says, "No thanks, man. The marginal utility of that fifth beer was, like, 20 cents, but the marginal utility of the sixth would be minus 10 cents." From his comments, we deduce that Justin
a. is an alcoholic. b. may think that a sixth beer would make him sick. c. is irrational. d. wrongly estimates the marginal utility of the fifth beer.
Most goods are:
A. nonrival in consumption. B. exclusive. C. rival in consumption. D. public goods.