Starting from long-run equilibrium, an increase in autonomous consumption results in ________ output in the short run and ________ output in the long run.
A. higher; higher
B. higher; potential
C. lower; higher
D. lower; potential
Answer: B
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Suppose that for Alicia the marginal benefit (MB) of producing is $75 and that the marginal cost (MC) of producing is $5. Suppose also that her marginal benefit of stealing is $85 and the marginal cost of stealing is $5. Is Alicia currently maximizing utility in terms of producing and stealing? If not, should she produce more and steal less, or produce less and steal more to move toward utility maximization?
A. Yes, Alicia is maximizing utility. B. No, Alicia is not maximizing utility. Since the MB/MC ratio for producing is less than the MB/MC ratio for stealing, Alicia should produce more and steal less. C. No, Alicia is not maximizing utility. Since the MB/MC ratio for producing is greater than the MB/MC ratio for stealing, Alicia should produce more and steal less. D. No, Alicia is not maximizing utility. Since the MB/MC ratio for producing is less than the MB/MC ratio for stealing, Alicia should steal more and produce less.
An unexpected rise in the growth rate of the CPI should send bond prices __________ and stock prices __________
A) up; up B) up; down C) down; up D) down; down
A prisoner's dilemma can be described as a situation in which
a. a decision maker is uncertain about the potential punishment for something done in the past b. an individual decision maker finds it in his best interest to pursue a course of action that can lead to a less than desirable outcome for the group c. producers act so as to avoid maximizing profits because of government retaliation d. individual firms seeks to maximize their own profits with no regard for the group e. the summation of individual demand curves creates an inelastic demand curve facing the industry
One U.S. Senator promises to vote for a measure that another U.S. Senator wants only if the favor is returned in kind. This is an example of
A) rational ignorance. B) median voter politics. C) logrolling. D) public interest talk. E) none of the above