The table above gives the utility from pens and pencils. If the consumer has an income of $4, pens cost $1, and pencils cost $.20, which of the following combinations maximizes the consumer's utility?
A) 4 pens and 0 pencils
B) 3 pens and 5 pencils
C) 3 pens and 6 pencils
D) no combination shown
B
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To eliminate the inefficiency resulting from pollution that creates an external cost, the government can impose a pollution tax on producers that is equal to the
A) MSB. B) MC. C) marginal external cost. D) MSC. E) price.
In an oligopoly
A) there are only a few firms. B) there is no product differentiation. C) there is free entry and exit. D) firms' decisions are unrelated to each other.
During the Iraq War, the U.S. government continued to borrow funds and yet the interest rate was steady or slightly declined. What could explain this?
A) The U.S. crowded out private saving. B) The U.S. crowded out private borrowing. C) The supply of loanable funds increased by a greater proportion than demand increased. D) The supply of loanable funds increased by a smaller proportion than demand increased.
Supply-side economists argue cuts in tax rates
A. can raise tax revenues. B. always reduce tax revenues. C. only lead to reductions in government spending. D. always increase budget deficits.