Lulu consumes only candy and cookies; she is currently buying more cookies than candy with her limited income. The last bag of candy gave Lulu the same additional utility as the last bag of cookies, and the prices of candy and cookies are the same. Lulu
A. is maximizing satisfaction given a limited income because the marginal utility per dollar is the same for candy and cookies.
B. is maximizing utility given a limited income because the prices of candy and cookies are the same.
C. could get more satisfaction from the same income by buying more candy and less cookies.
D. could get more satisfaction from the same income by buying more cookies and less candy.
Answer: A
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The aggregate supply curve cannot tell us
A) how the total dollar values of spending will ultimately be divided between output and prices. B) how changes in the price level affect quantity demanded of all commodities. C) what the effect of changes in interest rates will be on real GDP. D) anything about the quantity demanded of all commodities and the price level.
A consequence of a negative externality is that social costs __________ private costs, and the socially optimal level of output __________.
A. equal; is not equal to social costs or private costs B. do not equal; is obtained C. do not equal; is not obtained D. equal; is obtained E. equal; is not obtained
Monetary policy
a. must be described in terms of interest-rate targets. b. must be described in terms of money-supply targets. c. can be described either in terms of the money supply or in terms of the interest rate. d. cannot be accurately described in terms of the interest rate or in terms of the money supply.
Hotelling's model has been used to describe differentiation in the political "market." Suppose that 100 voters are evenly distributed between the extreme left and the extreme right on the political spectrum, and that all voters vote, and they always vote for the candidate closest to them on this spectrum. The numbers on this spectrum represent the number of voters lying to the left of the number. So, at the midpoint, fifty voters lie to the left and fifty to the right.
If Candidate X is running for office against Candidate Z, then:
A. all voters to the left of Z will vote for X, and all voters to the right of Z will vote for Z. B. all voters who would have voted for Y will vote for X. C. Candidate X might win. D. Candidate Z will win.