The price of one piece of pizza is $2 and the price of movies is $4. The consumer has $14 of income. The consumer is purchasing 3 pieces of pizza and receiving 20 utils for the last piece. He is also purchasing 2 movies and receiving 40 utils for the
last movie. This set of goods
A) is an optimum since the entire income is spent and the marginal utility per dollar spent is the same for the last unit of each good.
B) is an optimum since the entire income is spent and total utility is minimized.
C) is not an optimum because the marginal utility per dollar spent is greater for pizza than for movies.
D) is not an optimum because the consumer has not spent all of his money.
Answer: A
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Due to automatic stabilizers, when the nation's total income rises, government transfer payments
A. and tax revenues increase. B. decrease and tax revenues increase. C. increase and tax revenues decrease. D. and tax revenues decrease.
Rent controls unintentionally create
A) scarcity of rental units. B) surpluses of rental units. C) shortages of rental units. D) market-clearing outcomes in the apartment rental market.
The contributive standard of income distribution is met by
A) setting wages according to marginal productivity.
B) having a highly progressive income tax.
C) having the government determine all wages.
D) using local committees to determine the needs of families in the area.
Output decreases when aggregate expenditures ______.
a. increase b. decrease c. stagnate d. destabilize