Suppose the market demand for good X is given by QXd = 20 - 2PX. If the equilibrium price of X is $5 per unit then consumer surplus is
A. $75.
B. $100.
C. $25.
D. $50.
Answer: C
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If the consumption of a good by one person reduces its consumption by others, then the good is
A. nonrivalrous in consumption. B. rivalrous in consumption. C. nonexcludable. D. excludable. E. b and d
In an economy without government or a foreign sector the equilibrium level of output occurs when
A) actual saving equals actual investment. B) actual saving equals desired investment. C) desired saving equals desired investment. D) desired saving equals actual investment.
If aggregate supply is upward sloping, fiscal stimulus causes _______ in aggregate demand and _______ in prices.
A. A decrease; a decrease B. A decrease; an increase C. An increase; a decrease D. An increase; an increase
When economists assume that people are rational and respond to incentives, they mean:
A. people act with kindness. B. people are altruistic. C. people act in their own self-interest. D. people are selfish.