Alice is willing to pay $3 for the second slice of pizza she eats. The price she pays is $2. Alice's consumer surplus for this slice of pizza equals
A) $0.
B) $1.
C) $2.
D) $3.
B
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A needed reform in the U.S. income tax system that would reduce the costs of inflation is to
A) go back to taxing nominal wage and salary income. B) start taxing real wage and salary income. C) go back to taxing nominal interest income. D) tax real interest income.
Median household income is $50,000 per year. The typical household spends about $125 per year on milk, which has an income elasticity of about 0.07. From this information, we can conclude that
A) milk is a luxury. B) milk is a Giffen good. C) the income effect from a change in the price of milk is very large. D) the income effect from a change in the price of milk is very small.
How does the income approach to measuring GDP differ from the expenditure approach? Explain the meaning of value added and its importance in the income approach. What are the leakages from and injections into the circular flow? How are leakages and injections related in the circular flow?
What will be an ideal response?
Discuss some reasons why reductions in world trade barriers are driving the world toward a global economy.
What will be an ideal response?