The inverse relationship between quantity demanded and price of a good or service can be explained, in part, by
A. a shift in the demand curve.
B. diminishing marginal utility only.
C. the real income effect.
D. diminishing marginal utility and the rule of equal marginal utilities per dollar.
Answer: D
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When the Fed wants to lower the federal funds rate, it ________.
A. increases the reserve requirement B. increases the prime rate C. buys bonds from banks and the public D. increases the discount rate
Credibility is important to successful anti-inflationary policy in ________
A) new Keynesian theory B) traditional Keynesian theory C) real business cycle theory D) post classical theory
Economists believe that public debt
a. always promotes overconsumption b. promotes overconsumption if people view the government's liabilities as their own c. promotes overconsumption if people fail to view the government's liabilities as their own d. cannot promote overconsumption e. promotes underconsumption if people view the government's liabilities as their own
If it is discovered that using drugs enhances a person's chance of contracting a lethal disease, the cost of using drugs
A) increases. B) decreases. C) is not affected. D) is irrelevant, since they are illegal anyway.