A student enters a McDonald's fast-food restaurant. He orders the first Big Mac. He consumes it within 3 minutes. He then orders a second Big Mac and consumes it in 10 minutes. He eats only half of the third one in 18 minutes and throws away the rest. The store manager offers him the fourth for free. The student says: "No thanks." For the student described above, we can say that
A. diminishing marginal utility did not occur, he simply wanted to quit eating.
B. the law of diminishing marginal utility only applies to durable goods.
C. diminishing marginal utility began as soon as he had eaten the first Big Mac.
D. diminishing marginal utility set in only after he had consumed the second Big Mac.
Answer: C
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A new bank has reserves of $600,000, checkable deposits of $500,000, and government securities of $100,000. If the desired reserve ratio is 10 percent, the amount of loans this bank can make is
A) $60,000. B) $550,000. C) $50,000. D) $600,000. E) $540,000.
By making exchange ________, money allows for specialization and higher ________
A) more difficult; costs B) more difficult; productivity C) easier; costs D) easier; productivity
Think about cost structures associated with each of the following and decide which is most likely not to be a natural monopoly
a. personal computer company b. electric company c. cable television company d. water company e. local telephone company
In the equation of exchange, the variable whose value must be computed from the other variables is the
A) price level. B) quantity of output. C) quantity of money. D) velocity of money.