A consumer's preferences provide a ranking of
a. all possible consumption bundles.
b. only the consumption bundles that fall on the same indifference curve.
c. consumption bundles based their prices.
d. consumption bundles based on the consumer's income.
a
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If the price elasticity of demand is 1.5, regardless of which two points on the demand curve are used to compute the elasticity, then demand is
a. perfectly inelastic, and the demand curve is vertical. b. elastic, and the demand curve is a straight, downward-sloping line. c. perfectly elastic, and the demand curve is horizontal. d. elastic, and the demand curve is something other than a straight, downward-sloping line.
Recently, you decided to super-size your fries at McDonald's. On the one hand, your decision to super-size considered the additional costs associated with the super-size, including the additional monetary, caloric and cholesterol intake, as well as the extra time you had to wait for those fries because a new batch was being prepared. On the other hand, you determined that the extra benefits from super-sizing included a few more mouthfuls of satisfaction from an increased portion of fries. The benefits clearly outweighed the costs since you chose to super-size. Which of the following does this illustrate?
a. Marginal analysis b. The law of demand c. Delayed gratification d. Diminishing marginal utility e. Random behavior
Within the Keynesian aggregate expenditure-output model, if an economy operates below full employment:
A. a reduction in wage rates and resource prices will soon restore full-employment equilibrium. B. a reduction in the real interest rate will soon restore full-employment equilibrium. C. an increase in the real interest rate will soon restore full-employment equilibrium. D. the economy may remain below full employment unless aggregate expenditures increase.
A risk-averse individual would:
A. prefer a risky prospect with an expected value of $5 to a certain amount of $5. B. prefer $5 with certainty to a risky prospect with the expected value of $50. C. be indifferent between a risky prospect with an expect value of $5 and a certain amount of $5. D. prefer $5 with certainty to a risky prospect with the expected value of $5.