According to the law of diminishing marginal utility, after some point:
A. the more we buy of something, the more it costs.
B. people should spend all of their income on one good.
C. the more we consume of something, the less each additional unit adds to our satisfaction.
D. the more we consume of something, the smaller the total satisfaction received from that good.
Answer: C
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If real wages fall:
A) consumer demand is likely to increase. B) employers are likely to hire more workers. C) the level of economic production will always increase. D) the level of economic production will always decrease.
How do expectations of higher inflation become embedded in the economy and affect actual inflation?
What will be an ideal response?
Once either expansionary or contractionary fiscal policy has been undertaken,
A) aggregate demand will respond quickly and the problems in the economy will be corrected. B) aggregate demand will respond quickly in the short run but the economy will not improve in the long-run. C) a time lag exists between implementation and the results of the policy. D) taxes will need to be adjusted because of the recognition time lag.
The management of a rental building faces a rent control situation, where it cannot charge more than $400 a month in rent on the apartment. The management knows that the apartments are high in demand and renters would be willing to be $1000 per month for them. The management decides to offer controlled rent but force the tenants to rent furniture from them. This is an example of
a. Tying b. Bundling c. Exclusion d. Fraud