Consumer choice theory predicts that, with identical consumers, pay-as-you-go social security
A) always makes all generations worse off.
B) makes some generations better off, and cannot make any generation worse off.
C) may make some generations worse off and cannot make any generation better off.
D) may be Pareto improving.
D
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Consider a competitive market in which people consume at the point where their marginal rates of substitution between products X and Y are 3/5
In this same market, producers produce where their marginal rates of transformation between X and Y are also 3/5. However, producers are producing 7 of Y and 3 of X, and consumers wish to consume 5 of Y and 5 of X per unit of time. Explain how this situation can exist. Also determine if it represents an equilibrium or not. If not an equilibrium, what will tend to happen in the market?
How did families manage to keep up their standard of living in the 1970s and 1980s in the face of falling real wages?
A. They went on welfare and food stamps. B. They tightened their belts. C. They sent their stay-at-home mom to work. D. They went into debt.
The sum of national saving and capital inflows from abroad must equal:
A. capital outflows. B. aggregate demand. C. domestic investment in new capital goods. D. the trade deficit.
Explain the equimarginal rule.
What will be an ideal response?