Which of the following is considered to be a tel-tale signal that the point with the highest total utility has been found?
A. the marginal utility per dollar is the same for both goods
B. the marginal utility per dollar is controlled by trade-offs
C. the demand curves are flatter reducing quantity
D. the quantities demanded change so total utility rises
Answer: A. the marginal utility per dollar is the same for both goods
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A unanimous decision rule is equivalent to market exchange in terms of efficiency
a. True b. False
Suppose an economist collects the following data between May and December of a given year: gasoline prices rose sharply, consumer incomes remained constant, consumers purchases of fuel efficient vehicles remained constant from the previous year, the size of the population did not change, sales of gasoline decreased by 15 percent. Which of the following theories could be tested with this information?
A. When the price of gasoline rises, gasoline purchases fall. B. When consumer incomes rise, gasoline purchases rise. C. When the population increases, purchases of fuel efficient vehicles increase. D. No economic theory could be tested with this information.
A year-long drought that destroys most wheat crops for the season would shift the:
A. short-run aggregate supply curve only. B. aggregate demand curve only. C. aggregate demand curve, and the short-run aggregate supply curve would shift in response. D. short-run aggregate supply curve and the long-run aggregate supply curve.
To internalize the external costs of pollution is to:
A. make the polluter pay all of the costs associated with the polluting activity. B. require that private citizens rather than taxpayers pay for the harmful effects of pollution. C. levy taxes on manufacturing firms located in crowded urban areas. D. auction off pollution rights to those willing to pay the most for them.