Kathleen has eaten ten cookies. The tenth cookie makes Kathleen sick. This means that for Kathleen
A. the opportunity cost of cookies is high.
B. the tenth cookie has negative utility.
C. the tenth cookie has little utility.
D. cookies must have a zero price.
Answer: B
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Chuck Stake never eats vegetables, although he can afford to buy them. According to the economic way of thinking, Chuck
A) must have a serious physiological aversion to vegetables. B) was probably forced to eat them as a kid, and now hates them. C) believes the additional benefits from eating vegetables are outweighed by the additional costs. D) has studied economics enough to know that nobody needs to eat their vegetables.
A firm encounters its "shutdown point" when:
A) average total cost equals price at the profit-maximizing level of output. B) average variable cost equals price at the profit-maximizing level of output. C) average fixed cost equals price at the profit-maximizing level of output. D) marginal cost equals price at the profit-maximizing level of output.
The purchasing power parity (PPP) theory suggests the prices of identical items will equalize internationally. An illustration that supports this theory is the fact that the price of a McDonald's "Big Mac" is the same around the world
a. True b. False
What would be the effect of a reduction in the corporate profits tax?
a. Investment would decrease, the production function would shift downward, productivity would decrease, and so would output. b. Investment would increase, the production function would shift upward, productivity would increase and output would decrease. c. Investment would increase, the production function would shift upward, and both productivity and output would increase. d. Investment would decrease, the production function would shift downward, and both productivity and output would increase. e. Investment would increase, the production function would shift upward, productivity would decrease and output would increase.