Under a flexible exchange rate system, exchange rates are determined by free markets
Indicate whether the statement is true or false
TRUE
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A price support leads to inefficiency because
A) output is more than the efficient, equilibrium quantity. B) the marginal benefit of the last unit produced is larger than the marginal cost. C) the price charged is less than the equilibrium price. D) producer surplus is less than consumer surplus. E) producers must pay a subsidy to the government.
Pollution is a form of market failure called a public externality
a. True b. False
According to the absolute income hypothesis, the marginal propensity to consume
a. decreases as national income increases b. increases as national income increases c. is equal to one d. is constant as national income increases e. is equal to the marginal propensity to save
Consider two activities: Attending economics class and reading an economics textbook. Zack thinks he can learn economics by either attending class or reading the textbook. Zoe knows she learns best by both attending class and reading the textbook. Use indifference curves to illustrate each person's preferences for attending class and reading the text.
What will be an ideal response?