Consumer sovereignty
A. is dependent on profits.
B. is the idea that consumers determine what is produced in the economy through their demands.
C. is the idea that consumers can buy whatever they want to.
D. is only possible in a monarchy.
Answer: B
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When a firm's demand fluctuates randomly,
A) no profit can be earned on the inventory. B) the optimal inventory maximizes the profit of the inventory. C) the profit-maximizing inventory is found where the expected marginal benefit exceeds the expected marginal cost. D) managers cannot use marginal analysis to determine the optimal inventory.
Historical note: Since the end of World War II, the U.S. economy has experienced
a. no recessions b. one recession c. approximately one recession each year d. 100 recessions e. 11 recessions
When the government increases its demand for loanable funds, it causes the demand:
A. for loanable funds curve to shift to the right, which increases interest rates. B. of loanable funds curve to shift to the left, which decreases interest rates. C. of loanable funds curve to shift to the right, which decreases interest rates. D. for loanable funds curve to shift to the left, which increases interest rates.
Consider a consumer who spends all income on only two goods: pizza and soda. An extra slice of pizza would give the consumer 60 extra utils, while an extra can of soda would give the consumer 20 extra utils. Pizza costs $3 per slice, and soda costs $1 per can. In this situation, the consumer:
A. is buying too much pizza and not enough soda. B. should purchase more pizza and less soda. C. has maximized his or her total utility. D. needs to equate the marginal utilities for pizza and soda.