John is maximizing utility by choosing to spend 90 minutes reading a chapter in The Theory of Moral Sentiments, which will give him 450 units of utility, instead of spending 20 minutes reading a chapter of Atlas Shrugged, which will give him 200 units of utility. (Assume marginal utility decreases slowly.)
Answer the following statement true (T) or false (F)
False
To maximize total utility, the ratio of the marginal utilities to each price must be equal. In this case price is in minutes. Since 450/90 < 200/20, John would increase total utility by reading Atlas Shrugged.
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According to classical growth theory, if labor productivity increases,
A) people save more, which increases the capital per hour even more, and so economic growth continues indefinitely. B) the population grows and eventually real GDP returns to the subsistence level. C) the population grows but more slowly than real GDP so that people's incomes are permanently higher. D) the pursuit of profit causes further increases in capital per hour and technology and economic growth continues indefinitely. E) the growth rate of real GDP per person permanently increases.
Damian is texting while driving and ends up slamming into the back end of the car in front of him, which then strikes the car in front of it. By texting while driving, Damian has created a
A. negative externality. B. positive externality. C. nonexcludable public good. D. marginal social benefit.
All of the following are examples of capital except
a. the robot used to help produce your car b. a computer used by your professor to write this exam c. the factory that produces the costume jewelry you buy d. the inventory of unsold goods at your local hardware store e. an uncut diamond that you discover in your backyard
Which of the following constitutes a barrier limiting the entry of potential competitors into a market?
a. diseconomies of scale b. an elastic market demand for the product produced by the industry c. control over an essential resource d. a perfectly elastic demand curve