The marginal propensity to consume is calculated by
A. dividing income by consumption.
B. dividing the change in consumption by the change in income.
C. dividing consumption by income.
D. dividing the change in income by the change in consumption.
Answer: B
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Aimee sells hand-embroidered dog apparel over the Internet. Her annual revenue is $128,000 per year, the explicit costs of her business are $42,000, and the opportunity costs of her business are $30,000
What are the implicit costs of her business? A) $12,000 B) $30,000 C) $72,000 D) $86,000
Which of the following price indexes is designed to measure changes in the prices of goods and services purchased by a typical individual?
A) Producer Price Index B) Gross Domestic Product (GDP) Deflator C) Index of Leading Economic Indicators D) Consumer Price Index
Which of the following actions could be undertaken if the government wants to reduce an inflationary gap?
A) Increase taxes and reduce government spending. B) Reduce taxes and increase government spending. C) Increase taxes and increase government spending. D) Reduce taxes and reduce government spending.
The market demand function for wheat is Qd = 10 - 2P and the market supply function is Qs = 4P - 2, both measured in billions of bushels per year. Suppose the government wants to increase the price of wheat to $3/bushel and they impose a voluntary production reduction program to achieve their goal. What is the size of the consumer surplus?
A. $4 billion B. $8 billion C. $18 billion D. $6 billion