An O. Henry short story tells about a young married couple, quite poor, facing Christmas without the means to buy each other gifts. So without her knowing, he sells his watch to buy a comb for her lovely hair and at the same time without him knowing, she cuts her lovely hair and sells it to buy a fob for his watch. To an economist, this touching story tells us
a. that without complete and open information, utility cannot be maximized
b. total utility is not always greater than marginal utility
c. the law of diminishing marginal utility does not apply in all cases
d. the marginal utility of the comb for her was greater than the marginal utility of his watch and for him, the marginal utility of the fob was less than the marginal utility ofthe comb
e. the marginal utility of the comb for him was greater than the marginal utility of his watch and for her, the marginal utility of her hair was less than the marginal utility ofthe fob
E
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You are an analyst with a perfectly competitive firm that makes DRAM memory chips. You must manufacture the chips before you know what the demand will be. Based on the below figure, if the demand is high with an 80% probability and low with a 20% probability, the expected marginal revenue for a chip is ________.
A) $2.00
B) $2.60
C) $2.40
D) $1.40
If Mexico experiences a period of stable prices while the United States experiences rapid inflation, what will happen in the United States?
a. an increase in U.S. imports b. an increase in U.S. exports c. a decrease in U.S. imports d. an increase in U.S. net exports
If the multiplier effect did not exist, the aggregate demand curve would:
A. be horizontal. B. be flatter. C. be steeper. D. not exist.
When the labor supply curve is inelastic:
A. the percentage change in the quantity of labor supplied is less than the percentage change in the wage. B. the percentage change in the quantity of labor supplied equals the percentage change in the wage. C. employers cannot lower wages without losing all their workers. D. the percentage change in the quantity of labor supplied exceeds the percentage change in the wage.