The MPC can be defined as the:
a. Change in income divided by the change in consumption
b. Ratio of income to saving
c. Change in consumption divided by the change in income
d. Ratio of saving to consumption
Ans: c. Change in consumption divided by the change in income
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Which of the following is a feature of a good theory?
A) A good theory does not rely on data. B) A good theory cannot be tested with data. C) A good theory is free from approximations. D) A good theory closely predicts actual behavior.
Some low-income countries generally remain poor because
a. their institutional arrangements and policies often discourage productive activity and reduce the potential gains from specialization and exchange. b. they are oppressed by developed nations that benefit from the cheap goods available from countries with low wage rates. c. they are poorly endowed with natural resources, which are essential for long-term growth. d. when the average income level is low, workers have little incentive to earn higher incomes.
The economic perspective entails:
A. irrational behavior by individuals and institutions. B. a comparison of marginal benefits and marginal costs in decision making. C. short-term but not long-term thinking. D. rejection of the scientific method.
When grocery stores issue special discount membership cards for shoppers effectively offering different prices based on quantities consumed, this is an example of
A) price discrimination. B) price differentiation. C) product differentiation. D) patent protection.