A movement along in the consumption function is caused by a change in:
a. real disposable income.
b. can be caused by a change in the price level.
c. the marginal propensity to consume (MPC).
d. none of these.
a
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Externalities can lead to inefficient economic outcomes because:
A) firms do not have to pay the full cost associated with using inputs that cause pollution. B) firms that produce public goods tend to be monopolies. C) Both A and B are correct. D) none of the above
A production possibilities curve will shift inward
A) when the unemployment rate increases. B) when production is inefficient. C) when resources are expanding. D) when a war destroys the capital goods of a country.
Public choice theory indicates someone who spends more time evaluating which tennis racket to buy than deciding which U.S. Senate candidate to support
a. is behaving irrationally. b. is behaving rationally, given the structure of incentives confronted. c. will likely be responsible for electing the wrong senator. d. is failing to maximize his own personal utility.
The buyer runs a risk of being sold a good of low quality when there is
a. a principal-agent problem. b. a moral-hazard problem. c. a problem involving hidden actions. d. a problem involving hidden characteristics.