Which of the following would lead a utility-maximizing consumer to search for additional information?
a. an increase in income
b. an increase in the marginal cost of information
c. improved technology (e.g., Internet search programs)
d. a reduction in the dispersion of prices
e. an increase in the consumer's wage rate
C
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In an economy with no income taxes or imports, if the multiplier is 5, what does the MPC equal?
A) 0.9 B) 0.2 C) 0.4 D) 0.8 E) 0.5
Lower taxes on businesses will shift the aggregate:
a. demand curve rightward. b. demand curve leftward. c. supply curve rightward. d. supply curve leftward.
When marginal cost is greater than average cost, average cost is
a. rising. b. falling. c. constant. d. The direction of change in average cost cannot be determined from this information.
Sam has $200 a month to spend on either tanning sessions or rounds of golf. Tanning sessions are $20 each, and a round of golf is $40. Sam currently consumes six tanning sessions and two rounds of golf. Both tanning and golf are normal goods. If the price of a round of golf drops to $20, the income and substitution effects will cause Sam's consumption of tanning sessions:
A. to increase, since both effects predict an increase. B. to change, but the direction is dependent upon which effect is stronger. C. to decrease, since both effects predict a decrease. D. It is impossible to say what will happen without more information.