Most people would prefer to drive a luxury car that has all the options, but more people buy less expensive cars even though they could afford the luxury car because
A) car buyers are irrational.
B) the total utility of less expensive cars is greater than that of luxury cars.
C) the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars.
D) luxury cars cost a lot more than non-luxury cars.
Answer: C
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The elasticity of output with respect to capital
A) is the increase in output resulting from an increase in the capital stock. B) is the percentage increase in output resulting from a 1 % increase in the capital stock. C) is always greater than one. D) is the inverse of the elasticity of output with respect to labor.
Economists tell stories
a. in order to breathe life into economic theory and personalize abstract ideas b. because economics is an art, not a science c. as a way of rigorously testing economic theory d. because doing so is a required part of the scientific method e. to show how their theory can predict at least one real-world situation
Which of the following sectors in the economy accounted for about 70% of the spending in the U.S. during 2009?
a. The government b. Firms c. The foreign sector d. Investors e. Households
Smith and Jones comprise a two-person economy. Their hourly rates of production are shown in the accompanying table. Calculators Per HourComputers Per HourSmith10010Jones1206 Suppose Smith and Jones begin by producing 16 computers and 0 calculators per hour. If they wish to produce 14 computers and 40 calculators per hour efficiently, then Smith should spend ________, and Jones should spend ________.
A. 1 hour making computers; 20 minutes making computers and 40 minutes making calculators B. 30 minutes making each; 30 minutes making each C. 1 hour making computers; 40 minutes making computers and 20 minutes making calculators D. 45 minutes making computers and 15 making calculators; 1 hour making calculators