Liam wants to buy some milk and a box of cereal. If Liam buys 4 gallons of milk at $3.00 per gallon, the box of cereal costs $2.00 . If he buys 5 gallons of milk, the box of cereal is free. For Liam, the marginal cost of buying a fifth gallon of milk is
a. zero.
b. $1.00.
c. $2.00.
d. $3.00.
B
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Using Figure 6-2, calculate the price elasticity of demand (dropping all minus signs) between P = 4 and P = 6.
A. 3.0 B. 0.33 C. 0.40 D. 1.25
In the fooling model's AD/SAS/LAS diagram, short-run equilibria to the left of the LAS curve require the price level to be
A) above what workers expect. B) above what firms expect. C) below what workers expect. D) below what firms expect.
Which of the following statements is true?
(a) A barter system requires a double coincidence of wants. (b) Holding cash is a good way of preserving the value of assets. (c) Commercial banks must cover their deposits fully with cash reserves. (d) A fall in reserve requirements forces banks to curtail credit.
Measured as a share of the economy, total government expenditures:
A. have been between 10 and 15 percent of the U.S. economy since 1930. B. have been between 20 and 25 percent of the U.S. economy since 1930. C. rose from less than 10 percent in 1929 to about 35 percent currently. D. declined from more than 50 percent in 1929 to approximately 25 percent currently.