What does the marginal rate of substitution measure?
A) It measures the rate at which a consumer is willing to trade off one product for another while keeping utility constant.
B) It measures the rate at which a consumer will substitute one good for another when the price of one good changes.
C) It measures the rate at which a consumer must give up one good to purchase another good.
D) It measures the change in utility from consuming one additional unit of a good.
A
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How does real gross domestic product (GDP) differ from nominal GDP?
A) Nominal GDP can be used to directly compare the amount of output produced from year to year, while real GDP cannot be used for such comparison. B) Nominal GDP controls for price changes, while real GDP does not. C) Real GDP controls for price changes, while nominal GDP does not. D) There is no difference between nominal GDP and real GDP.
An economist would say the price is too high for a certain service if
a. poor people couldn't afford to buy it. b. nobody could afford to buy it. c. the price was above marginal cost. d. it is an essential service and consumes a significant share of income.
Explain why perfectly competitive markets achieve allocative efficiency.
What will be an ideal response?
Mexico's gains from NAFTA have benefited mostly:
a. unskilled workers. b. semi-skilled workers. c. higher-income workers. d. agricultural workers.