Diamonds have a high marginal utility because they
a. are considered to be so useful
b. have such high total utility
c. have high consumer surplus
d. are so scarce
e. are so expensive
D
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Why may investors buy a Treasury bill with a negative real interest rate?
A) fear of rising inflation B) concern about high yields on other bonds C) fear of default by the U.S. government D) concern about the high default risk of alternative investments
An increase in the reserve ratio
A) has an expansionary effect on the money supply. B) has a contractionary effect on the money supply. C) increases the money multiplier. D) will cause banks to make more loans.
Which of the following is the best explanation of why a lack of information is a problem when the government wants to impose price regulation on a monopolist?
a. the government does not have information about which firms are monopolies. b. firms that are monopolies do not have information about their level of profit or about potential competition. c. consumers do not have information about which firms are competitive and which firms are monopolies. d. regulators do not have information about the demand and marginal costs of the firms that they regulate.
State and explain the No Marginal Improvement Principle (for finely divisible actions).
What will be an ideal response?