Even though Mary's income is very low, she makes sure that she purchases enough milk for her family to drink. As her income rises, she does buy more milk. Which graph in the above figure best represents Mary's Engel curve for milk?
A) Graph A
B) Graph B
C) Graph C
D) Graph D
C
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Laissez-faire capitalism is characterized by:
A. Very limited government role in the economy B. Active government intervention in the economy C. Individuals and firms abiding by a government economic plan D. A very fair distribution of income and wealth
The owner of a perfectly competitive firm is currently earning an economic profit of zero. This owner
A. should raise the price of the product to increase profits. B. is covering all of his fixed costs. C. will continue producing in the short-run but will shut down in the long run if profits do not increase. D. should shut down since profits of zero are not good.
An accounting identity
A. is useless in analyzing balance of payments since one cannot tell from the identity whether an equilibrium exists or not. B. ensures a balance but does not ensure an equilibrium. C. applies only to plans of economic agents and not to their actual actions. D. ensures that all balances will be in equilibrium.
The stock market, banks, and savings and loans are three examples of institutions that economists would classify as belonging to the financial
A. capital market. B. investment market. C. savings markets. D. labor market.