Consider a consumer choosing between spending her money on food, F, or clothing, C. Assume that a unit of food and a unit of clothing have the same price, and that the consumer can afford a total of 20 units of either food or clothing. The benefit of food is given by B(F) = 100?F, with MB(F) = 50/?F. The benefit of clothing is given by B(C) = 25C, with MB(C) = 25. How many units of clothing should the consumer buy?
A. 0
B. 2
C. 4
D. 6
D. 6
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Newly constructed homes are classified as
a. private consumption b. housing services c. housing supply d. investment e. construction.
It can take many months or even more than a year to begin a(n) _______________ fiscal policy after a recession has started.
a. contractionary b. exploratory c. aggressive d. expansionary
If the federal government is running a budget surplus,
a. its expenditures must be greater than its revenues. b. the supply of money will decline. c. it will be able to reduce its outstanding debt. d. the U.S. Treasury will have to borrow additional funds in order to cover the surplus.
The law of diminishing marginal returns
A. causes average fixed costs to decline continuously as output increases. B. causes the difference between average total cost and average variable cost to shrink as output increases. C. results in MC but not ATC curves eventually increasing at an increasing rate. D. results in average variable cost (AVC), average total cost (ATC), and marginal cost (MC) curves eventually increasing at an increasing rate.