Diminishing marginal utility explains why:
A) the income effect exceeds the substitution effect.
B) the substitution effect exceeds the income effect.
C) supply curves are upsloping.
D) demand curves are downsloping.
Ans: D) demand curves are downsloping.
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Can phenomena as diverse as pencil production and highway traffic be legitimately studied by economists?
A) No. One is properly in the field of business, the other in city planning. B) No. Although production is properly in the field of economics, highway traffic is only properly studied by planners and environmentalists. C) Yes. Both phenomena emerge from choices of individuals with limited information. D) Yes. Both phenomena emerge in the market system without any human intervention.
Diseconomies of scale occur when high levels of output are produced in a short period of time
a. True b. False Indicate whether the statement is true or false
Economists represent a consumer's preferences using
a. demand curves. b. budget constraints. c. indifference curves. d. supply curves.
One year ago Sam purchased bonds for $100,000 . He just sold them for $120,000 . During the year the price level rose by 5%. If the tax rate on capital gains is 20%, how much did Sam gain in real terms?