A consumer has $50 to spend. He has to decide between buying two goods: magazines priced at $5 each and DVDs priced at $10 each. Which of the following combinations of the two goods will exactly satisfy his budget constraint?
A) 3 magazines and 4 DVDs
B) 2 magazines and 4 DVDs
C) 6 magazines and 1 DVD
D) 2 magazines and 2 DVDs
B
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If disposable income increases by $100 and saving increased by $25, ceteris paribus, we may conclude that
A) the marginal propensity to consume is 0.25. B) the marginal propensity to save is 0.25. C) $15 is autonomous consumption. D) a change in disposable income is induced by a change in consumption.
An export subsidy is a payment by the government to exporters to permit them to charge lower prices.
Answer the following statement true (T) or false (F)
Unlike perfectly competitive firms, monopolists can
a. earn positive short-run economic profit even if price is less than average variable cost at all rates of output b. sell any quantity of output at any price they choose c. earn long-run economic profits d. reduce the sales of other firms in the industry through advertising e. face a perfectly elastic demand curve
If U.S. interest rates are higher than the world interest rates, we would expect the U.S. dollar to appreciate
a. True b. False Indicate whether the statement is true or false