In economics, people make decisions regarding consumption based on comparing
A. average satisfaction with additional costs.
B. average satisfaction with average costs.
C. additional units of satisfaction with additional costs.
D. additional units of satisfaction with average costs.
Answer: C
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Which of the following is a strength of a command-based economic system?
a. It is possible for goods to be allocated based on need rather than based on willingness and ability to pay. b. Since price is freely set based on supply and demand, there are few shortages or surpluses. c. Consumers can transmit their preference for product quality and variety by way of their "dollar votes" cast in the marketplace. d. Producers have strong incentives to innovate because successful innovators are rewarded with higher profit.
Rating agencies ______ the risk of mortgage-backed securities.
a. accurately assessed b. overestimated c. underestimated d. warned investors of
On a linear demand curve, demand is ________ at small quantities than it is at the middle of the demand curve.
A. more elastic B. less elastic C. equally elastic D. There is insufficient information in the question.
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease