Distinguish between scarcity and shortage.
What will be an ideal response?
Scarcity implies that people want more of a good than is freely available. Shortage implies that people want more than is available at the going price. All economic goods are scarce, whereas there are shortages only in the presence of price ceilings that set price below equilibrium levels.
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When you toss your spare quarters into a jar so you can use them later at the laundromat, you are using money in its function as a
A) medium of exchange. B) unit of account. C) store of value. D) record keeping device.
Refer to the payoff matrix above. Which of the following is true for Campers R Us?
A) They have two dominated strategies.
B) They have zero dominated strategies.
C) They have three dominated strategies.
D) They have one dominated strategy.
Suppose a consumer wants to obtain the highest possible satisfaction from goods purchased on a fixed budget. Which of the following must be equal for all goods?
a. Total utility. b. Marginal utility. c. Average utility. d. Marginal utility per dollar.
Assuming that investment, government expenditures, and net exports are all autonomous, the marginal propensity to consume for the economy represented in Figure 9.9 is
A. 0.25. B. 1.0 since aggregate expenditure is a straight line. C. 0.5. D. Indeterminate since there is no consumption function.