From an economic perspective, when consumers leave a fast food restaurant because the lines to be served are too long, they have concluded the:
A. marginal cost of waiting is greater than the marginal benefit of being served.
B. management is making an assumption that other things are equal.
C. management is exhibiting irrational behavior by not maximizing profits.
D. marginal cost of waiting is less than the marginal benefit of being served.
Answer: A
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If the Fed buys a $100,000 government security from a bank when the desired reserve ratio is 10 percent and the currency drain ratio is 50 percent, the bank can loan a maximum of
A) $90,000. B) $100,000. C) $60,000. D) $40,000. E) $50,000.
Suppose GE produces 1 million light bulbs per month While labor is variable both in the short run and the long run, capital is fixed in the short run. Labor is sold at a rate w and capital is rented at a rate r. a. On a graph with labor on the horizontal axis, illustrate the current isocost and isoquant for GE. Carefully label the slope of the isocost. b. For the rest of the problem, suppose a new tax on capital is implemented but GE intends to continue to produce 1 million light bulbs per year. What will GE do differently in the short run and the long run? Explain using your graph from part (a). c. Using your answer to part (b), explain what happens to the short run cost curve in the short run. What happens to this short run curve in the long run? Do costs rise more or less in the
long run than they do in the short run? d. Do total costs rise more or less in the long run than total expenditures do in the short run? Explain. What will be an ideal response?
If national income = $1,000 . autonomous consumption = $200, the MPC = 0.80, and intended investment demand is $200, then actual investment will
a. equal intended investment, and the economy will be in equilibrium b. be less than intended investment, and production and incomes will grow c. be greater than intended investment, and production and incomes will fall d. be less than intended investment, and production and incomes will fall e. be greater than intended investment, and production and incomes will grow
John wants to buy a new lawn mower. He can either buy it in the US and pay $500 or buy it in Mexico and pay 8188 Mexican Pesos. At the exchange rate of 1 Mexican Peso=0.771US$, ignoring any other costs, he would
a. ?Prefer buying in the US b. ?Prefer buying in Mexico c. ?Be indifferent about where he buys his television d. ?None of the above