The budget constraint shows that
A. the consumer faces a trade-off in the consumption of goods.
B. as consumers spend more on one good, they spend more on others.
C. the consumer can have as many goods as he wants.
D. total income equals total spending on one good.
Answer: A
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Justin has a part-time job and earns $50 per week. He spends his entire income on two goods: Hamburgers (which cost $2 each) and movie rentals (which cost $3 each). Draw Justin's budget constraint
Suppose that Justin decides to purchase 10 hamburgers and rent 10 movies this week. Is this choice within Justin's opportunity set? Show this choice on your graph.
Purchasing a profitable supplier increases profits only if
a. You pay equal to the company's discounted future profits b. You pay higher than the company's discounted future profits c. You pay lower than the company's discounted future profits d. None of the above
Two countries will choose to specialize and trade only if:
A. the terms of trade fall between their opportunity costs for producing the goods on their own. B. the opportunity costs are the same for the two nations. C. the opportunity costs are astronomically high for producing the goods on their own. D. one country possesses the absolute advantage in both goods, but the comparative advantage in only one good.
The MFC curve increases for a monopsonist because:
A. as more workers are hired, all workers receive higher wages. B. output price rises as a firm's market power increases. C. hiring more workers does not affect wages. D. the later workers hired are less productive.