Which of the following will shift the consumption function upward?
A. an increase in consumer wealth
B. an increase in disposable income
C. an increase in personal income taxes
D. a decrease in the MPC
Answer: A
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Assume someone organizes all farms in the nation into a monopoly. As a result, consumer surplus will
A) not change. B) increase. C) decrease. D) either increase, decrease, or not change depending if the monopoly's marginal revenue curve lies below, above, or is the same as its demand curve. E) None of the above answers is correct because the effect on consumer surplus depends on whether the monopoly is a single-price or a price-discriminating monopoly.
Assume that Anne has $300 to spend on DVDs and CDs. Her optimal consumption of DVDs and CDs is illustrated by a tangency between a budget line and an indifference curve. Now assume that the price of CDs rises but the price of DVDs falls
How can you show that Anne is made better off by these price changes? A) Show that the price changes move Anne along her budget line to a higher indifference curve. B) Show that Anne can now afford to buy more DVDs, which give her greater utility than CDs. C) Show that the price changes shift Anne's budget line outward; the budget line is tangent to a higher indifference curve. D) Show that Anne can afford to buy the optimal combination of DVDs and CDs at their original prices; then show that Anne can now reach a higher indifference curve.
Risk pooling:
A. reduces the risk of catastrophes happening collectively to groups. B. doesn't reduce the chances of catastrophes happening to individuals. C. assures the individuals that they are less likely to have a catastrophe occur. D. None of these statements is true.
Tax revenues are an advantage of ________, which are not offered by command-and-control policies.
A. pollution allowances B. tradeable pollution permits C. pollution taxes D. pollution tax credits