A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill.Given the scenario described, if the market price of grills falls from $395 to $340, then we can say:
A. Butch's consumer surplus decreases from $10 to $0, and total consumer surplus increases from $10 to $80.
B. Abe's consumer surplus decreases from $60 to $5, and total consumer surplus decreases from $70 to $5.
C. Collin's consumer surplus increases from $0 to $20, and total consumer surplus increases from $5 to $70.
D. Abe's consumer surplus increases from $5 to $60, and total consumer surplus increases from $5 to $70.
Answer: D
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Measured wealth is a less accurate indicator of economic inequality than is measured income because measured wealth excludes
A) owner-occupied housing. B) financial assets. C) depreciation. D) human capital.
If the price of a slice of pizza rises from $2.50 to $3, and quantity demanded falls from 10,000 slices to 7,400 slices, using the formula for arc price elasticity what is the percentage change in price?
A) 18.18% B) 29.89% C) 20% D) 16.67%
The sum of the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) always equals:
a. 1. b. 0. c. the interest rate. d. the marginal propensity to invest (MPI).
Greater economic efficiency and income equality can usually both be achieved in an economy simultaneously.
Answer the following statement true (T) or false (F)