The above figure shows Sam's budget line and one of his indifference curves. What combination of coffee and gasoline will Sam select?
A) combination a because that contains all the gasoline he needs and still has some coffee
B) combination c because that contains all the coffee he needs and some gasoline
C) combination b because it is on his budget line and on the highest attainable indifference curve
D) none of the above
C
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The type of unemployment created by the normal rate of reentry and entry into the labor force is
A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment.
Economies of scale yield
a. declining average cost as output increases b. declining marginal cost as output increases c. declining total cost as output increases d. diminishing average returns as output increases e. increasing marginal revenue as output increases
The argument that an increase in aggregate demand, as a result of an increase in government purchases, will be offset by increases in savings (less current consumer spending) for future taxes is called:
a. the crowding out effect b. the Ricardian equivalence theorem c. the budget deficit effect d. the budget surplus effect
Which of the following is an example of a positive externality?
a. Sue not catching the flu because she got a flu vaccine b. Mary not catching the flu from Sue because Sue got a flu vaccine c. Sue catching the flu because she did not get a flu vaccine d. Mary catching the flu from Sue because Sue did not get a flu vaccine