What is the rule for efficient output selection and how does the competitive market achieve it?
The rule is MC = MU. In competition, MC = P. Consumer decision making brings about P = MU. Since P for a particular good is the same for both buyers and sellers, MC = P = MU. So the competitive market achieves MC = MU.
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Presidents running for re-election are tempted to urge the Federal Reserve to ________ the rate of money growth in order to reap the political benefits of ________
A) reduce, permanently lower inflation B) reduce, temporarily lower inflation C) increase, temporarily lower inflation D) increase, temporarily higher real GDP E) increase, permanently higher real GDP
Partial factor taxes are levied on an input in only some of its uses.
A. True B. False C. Uncertain
The above figure shows Bob's utility function, which is
A) concave. B) convex. C) linear. D) L-shaped.