In order to maximize utility, a consumer should allocate money income so that
A) the marginal utility of the last unit of each product consumed is greater than the total utility of each product consumed.
B) the total utility derived from each product consumed is the same.
C) the marginal utility obtained from the last dollar spent on each product is the same.
D) the elasticity of demand on all products purchased is the same.
Answer: C
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According to the equation of exchange, if total output is 2,000 units, the velocity of money is 5, and the money supply is $1,000, the average price per transaction will be
a. $0.50. b. $2.50. c. $5.00. d. $7.50.
The law of increasing costs indicates that
a. as more goods are produced, the dollar cost of producing those goods increases b. no matter how many goods you produce, costs tend to increase c. the opportunity cost of producing a good increases as more of the good is produced d. although total cost may increase as you produce more of a good, the opportunity cost of producing additional units of the good actually decreases e. because you are able to adopt greater division of labor when producing more goods, the opportunity cost of producing a good increases as less of the good is produced
In a planned economy,
a. prices are used to coordinate economic activity. b. central planners set production targets and tell producers how to produce. c. high prices discourage use of the most scarce resources. d. central planners allow the price to determine distribution of a product.
When analyzing how money affects income, we are analyzing the way in which a
a. stock affects another stock. b. stock affects a flow. c. flow affects another flow. d. flow affects a stock.