Maria buys a cup of coffee every day after her economics class. The first cup of coffee always tastes wonderful. The second does not taste quite as good as the first. The third does not taste quite as good as the second. Maria is experiencing
A) irrational behavior.
B) the law of diminishing marginal utility.
C) the income effect.
D) the substitution effect.
Answer: B
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Figure 4.4 illustrates the supply of tacos. A decrease in the supply of tacos is represented by a movement from
A) point a to point b. B) point c to point b. C) S0 to S1. D) S2 to S1.
Other things equal, if the government increased the quantity of pollution rights to be sold,
a. pollution would not be affected b. the price of pollution rights would rise, and the amount of pollution would decrease c. the price of pollution rights would fall, and the amount of pollution would decrease d. the price of pollution rights would fall, and the amount of pollution would increase e. the price of pollution rights would rise, and the amount of pollution would increase
In a market economy, persons undertaking an investment project must
a. obtain approval from political authorities before the project can be undertaken. b. either personally supply the required funds or convince other investors and financiers to do so. c. finance the project entirely with equity capital. d. arrange for bank financing before the project can be undertaken.
Several firms are operating in a market where they take the other firms' response to their actions into account. This market is:
A. a monopolistically competitive market. B. an oligopolistic market. C. a competitive market. D. a monopoly.