Eric provides cheese (H) and milk (M) to the market with the following total cost function: C(H, M) = 10 + 0.4H2 + 0.2M2. The prices of cheese and milk in the market are $2 and $5 respectively. Assume that the cheese and milk markets are perfectly competitive. What output of milk maximizes profits?
A. 12.5
B. 1.25
C. 15
D. 20
Answer: A
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A. higher. B. much lower. C. about the same as in the United States. D. not compared to the United States, because there are no unemployed in Europe
When household incomes are ranked from lowest to highest, the middle income is known as the:
A) median income. B) mean income. C) means-tested income. D) official poverty level. E) transfer income.
If consumption increases by $400 when income increases by $500, then the marginal propensity to consume is
A) 900. B) 100. C) 1.20. D) 0.80.
Most economists have argued that the persistence of high unemployment despite New Deal policies:
a. constitutes a complete repudiation of New Deal policies. b. was the result of "sticky" wages. c. was in part the result of pressures from government to maintain wages. d. Both b and c are correct.