In the market for a particular pair of shoes, Jena is willing to pay $75 for a pair while Jane is willing to pay $85 for a pair. The actual price that each has to pay for a pair of shoes is $65. What is the combined amount of consumer surplus for Jena and Jane?
A. $215.
B. $130.
C. $10.
D. $30.
Answer: D
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Because of a bank merger, Ms. Davis lost her position as Vice President and had to seek work with other banks. Ms. Davis has the skills necessary to find a new job, thus she is best considered as
A) frictionally unemployed. B) cyclically unemployed. C) structurally unemployed. D) naturally unemployed.
Suppose that a firm's long-run average total costs of producing televisions decreases as it produces between 10,000 and 20,000 televisions. For this range of output, the firm is experiencing
a. economies of scale. b. constant returns to scale. c. diseconomies of scale. d. coordination problems.
"Monetary policy can be described either in terms of the money supply or in terms of the interest rate.". This statement amounts to the assertion that
a. rightward shifts of the money-supply curve cannot occur if the Federal Reserve decides to target an interest rate. b. the activities of the Federal Reserve's bond traders are irrelevant if the Federal Reserve decides to target an interest rate. c. changes in monetary policy aimed at expanding aggregate demand can be described either as increasing the money supply or as increasing the interest rate. d. our analysis of monetary policy is not fundamentally altered if the Federal Reserve decides to target an interest rate.
What are the marginal propensity to consume (MPC) and the marginal propensity to save (MPS)? How is the MPC related to the consumption function?
What will be an ideal response?