Toby tells you that he prefers hamburgers to hot dogs, hot dogs to tacos, and hamburgers to tacos. This violates what assumption made when analyzing consumer preferences?
A. that there is a diminishing marginal rate of substitution
B. that consumers are rational
C. that more is better
D. This does not violate any assumptions relating to consumer preference.
Answer: D
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If the U.S. national income is ten times the national income of Canada and the MPC in the US is 0.75 while it is 0.90 in Canada, then
a. the MPS is greater in the U.S. but consumption is greater in Canada b. the MPS is greater in the U.S. but saving is greater in Canada c. the MPS is greater in Canada but saving is greater in the U.S. d. both the MPS and saving is greater in Canada e. both the MPS and saving is greater in the U.S.
Tacit collusion is
A. collusion that is carried out without any explicit agreement among firms. B. collusion about tactics, rather than strategy. C. agreements that are sponsored by government. D. similar to pure competition.
Which of the following would make the spending multiplier smaller?
A) a reduction in marginal propensity to save B) a small initial trade deficit C) a reduction in the marginal propensity to import D) a real appreciation E) none of the above
When marginal cost pricing occurs
A) price equals the additional cost society incurs in producing the next unit of an item. B) the firm can only break even if it does not set price to marginal cost. C) price equals average variable cost but exceeds average total cost. D) the firm is at the shutdown point.