If the MPC is three quarters, then an increase in disposable income will cause
A. consumption to increase, while saving decreases.
B. consumption to decrease, while saving increases.
C. consumption and saving both to increase, with consumption increasing more than saving.
C. consumption and saving both to increase, with consumption increasing more than saving.
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A firm with market power is producing a level of output at which price is $8, marginal revenue is $5, average variable cost is $6, and marginal cost is $10. In order to maximize profit, the firm should
A. increase output. B. shut down. C. keep price the same. D. increase price. E. decrease price.
The interest rate affects the goods market through its impact on money demand.
a. true b. false
Along a perfectly elastic demand curve,
A. the slope is always zero. B. the price elasticity of demand is 1. C. consumer purchases will not respond at all to a change in price. D. All of the responses are correct..
Refer to the graph below representing the market demand curve for a monopolist’s output. Which of the following prices shown on the graph should the monopolist charge if it wishes to maximize its total revenue?
a. $12
b. $10
c. $8
d. Any of the above because total revenue does not change with a change in price.