Economic rent directs resources to
A) the people who can use them most efficiently.
B) people only.
C) large corporations.
D) labor-intensive industries only.
Answer: A
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As disposable income decreases, consumption
A. decreases. B. may either increase or decrease. C. may either increase or decrease depending on the MPC. D. increases.
Which of the following is not an assumption of perfect competition?
A. Many buyers B. Many sellers C. Branded products D. Identical (or indistinguishable) products
Suppose that John Maestro, the owner of a tennis shop in Evanston, Illinois, decides to purchase a new machine that restrings tennis rackets in half the time it formerly took. The new technology costs $1,000 . and the MPC is 0.80 . How much real GDP will be generated from John's $1,000 initial investment?
a. $200 b. $500 c. $1,000 d. $2,000 e. $5,000
Briefly explain what the sacrifice ratio is and how policy makers can use it in their decision making. Then give an example of policymaking using the sacrifice ratio that highlights the limits of this tool.
What will be an ideal response?