MC and MU are set equal to one another in a market economy because
a. producers and consumers are free to communicate with one another.
b. producers and consumers both respond to the same price.
c. consumers must accept the prices set by producers.
d. producers must accept the price set by consumers.
b
You might also like to view...
Suppose a tax is imposed on sellers. The more inelastic the demand for the taxed item, the
A) greater the share of the tax paid by sellers. B) smaller the deadweight loss from the tax. C) larger the decrease in consumption because of the tax. D) All of the above answers are correct.
All else being equal, if the rate of growth in productivity in Spain is greater than the rate of growth in productivity in the United States, the euro
A) will decrease in value relative the U.S. dollar. B) will nominally depreciate against the dollar, but its real value relative to the dollar will remain unchanged. C) will increase in value relative to the U.S. dollar. D) will nominally appreciate against the dollar, but its real value relative to the dollar will remain unchanged.
Renee plans to graduate and enter the job market in the spring. Economists are forecasting a recession during the spring. As a result, she
a. is happy because unemployment rates are low during a recession b. is happy because salaries are usually higher during a recession c. does not care because the availability of jobs is not affected by whether there is a recession d. is unhappy because it is generally difficult to find a job during a recession e. favors increasing taxes to help head off the recession
The substitution effect takes place as we move
A. upward from I to J.
B. down from J to I.
C. up from J to K.
D. down from K to J.