Kathy eats five slices of pizza on a Saturday night but admits each slice of pizza doesn't taste as good as the previous one. This suggests that for Kathy the
A. marginal utility of a slice of pizza is negative.
B. total utility of slices of pizza is increasing by larger and larger increments.
C. total utility of slices of pizza is declining.
D. marginal utility of a slice of pizza is positive but decreasing.
Answer: D
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A newspaper headline reads: "Fed Cuts Federal Funds Rate for Fifth Time This Year." This headline indicates that the Federal Reserve is most likely trying to ________.
A. ease monetary policy B. tighten monetary policy C. raise interest rates D. reduce inflation in the economy
If a perfectly competitive firm is producing 2,500 units and, at the 2,500th unit, the difference between marginal revenue and marginal cost (MR - MC) is positive, which of the following is true?
A) The firm is maximizing profit. B) The firm should increase production to maximize profit. C) The firm should decrease production to maximize profit. D) The 2,500th unit costs more to produce than the firm earns in revenue.
The unemployment compensation program:
a. makes recessions more severe. b. makes recession less severe. c. makes recessions more severe and inflationary episodes less severe. d. makes recessions less severe and inflationary episodes more severe. e. has no effect on the severity of recessions and inflationary episodes.
Historical note: The demand-pull inflation during the Vietnam War period (late 1960s, early 1970s)
a. resulted mostly from a fall in aggregate supply brought about by the war b. was precipitated by the rapid oil price increases that made military goods more expensive (fuel for tanks and aircraft) c. was sparked by the rise in taxes needed to finance the war d. was caused in part by the increased demand for military goods e. was fueled by a shift to the left of aggregate demand because people in the armed forces were no longer consumers