The statement "Households maximize utility" means that households
a. try to be as useful as possible to the economy
b. are only interested in maximizing their earnings
c. are assumed to buy useful things before they buy luxuries
d. are only interested in acquiring material wealth
e. are assumed to do what they think will increase their satisfaction
E
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The two basic markets shown by the simple circular flow model are
A. product and resource. B. capital goods and consumer goods. C. free and controlled. D. household and business.
If price is above the average variable cost but below the average total cost of a representative firm in a competitive industry
a. There will be new industries blooming over time b. There will be an interest in the industry over time c. There will be an exit from the industry over time d. All of the above e. None of the above
Mary has $10 to spend each week on coffee, Qc and magazines, Qm. The price of a coffee is $1, and the price of a magazine is $2. Mary's budget equation is ________
A) Qm = 10 - Qc B) Qm + Qc = 20 C) $1 × Qc + $2 × Qm = $10 D) Qm = 10 - 2 × Qc
When some firms leave a perfectly competitive market, the price:
A. falls, and profits of those left rise. B. falls, and profits of those left fall. C. increases, and profits of those left rise. D. increases, and profits of those left fall.