A friend is currently earning income but does not expect to earn income in the future. When the interest rate rose, I observed him saving less. From this, I can conclude that current consumption is an inferior good for my friend.
Answer the following statement true (T) or false (F)
False
Rationale:
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Once a firm has selected a price for its product, quantity is decided by consumers and their demand curves.
Answer the following statement true (T) or false (F)
If MUx/Px > MUy/Pyx, the consumer can increase utility by buying more of good x
a. True b. False
One solution to the problems of marginal-cost pricing of a regulated natural monopolist is average cost pricing. In this model, the monopolist is allowed to price its production at average total cost. How does average-cost pricing differ from marginal-cost pricing? Does this solution maximize social well-being?
A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is realizing:
A. a loss that could be reduced by producing more output. B. a loss that could be reduced by producing less output. C. an economic profit that could be increased by producing more output. D. an economic profit that could be increased by producing less output.