Here is a consumption function: C = C0 + MPC(Yd). If MPC is 0.95, then we know that
A) as Yd rises by $1, Co rises by $0.95.
B) as Yd rises by $1, C rises by $0.95.
C) Yd rises by $0.95.
D) as C0 rises by $0.05, Yd rises by $1.
B
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Which of the following is not an important difference between privately-owned enterprises and government institutions?
A) Decision makers confront different sets of incentives. B) Different kinds of information are available to decision makers. C) Government has the generally acknowledged right to use coercion. D) Self-seeking motives are less characteristic of government employees.
In the circular flow model of an economy, households
A) receive income from buyers of goods and services. B) receive income from the sale of factors in the goods markets. C) pay firms for the use of their factors. D) receive income from producers for the use of factors in the factor markets.
When the market price is set below the equilibrium price:
A. the market is not efficient. B. total surplus is not maximized. C. producer surplus is decreased. D. All of these are true.
Prices
A. solve the problem of distribution of products among consumers. B. act as rationing devices. C. under laissez-faire produce an efficient allocation of resources. D. do all of the things listed here.