If disposable income increases from $912 to $927 billion and MPC = 0.6, then consumption will increase by
A. $56 billion.
B. $6 billion.
C. $9 billion.
D. $54 billion.
Answer: C
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When a firm's long-run average total cost falls as its output increases, the firm is experiencing
A) economies of scale. B) diseconomies of scale. C) constant returns to scale. D) decreasing marginal returns. E) decreasing cost of marginal returns.
In the above figure, an innovation that increases the demand for high-skilled workers and decreases the demand for low-skilled workers will
A) reduce the amount by which WH exceeds WL. B) increase the amount by which WH exceeds WL. C) shift the SH curve leftward. D) shift the SL curve rightward.
Explain what is meant by economic efficiency. Does efficiency imply that the fastest production processes or the most powerful equipment must always be used? Explain
What will be an ideal response?
Suppose that the income elasticity of demand for peanut butter is 0.75. Which of the following is TRUE?
A. Peanut butter is an inferior good, because income elasticity is positive. B. Peanut butter is a normal good, because income elasticity is less than 1. C. Peanut butter is an inferior good, because income elasticity is less than 1. D. Peanut butter is a normal good, because income elasticity is positive.