Suppose an individual experiences a $20,000 increase in real income and the individual believes this increase in income is permanent. Economic theory suggests that this individual's current consumption will
A) remain unchanged.
B) increase by more than $20,000.
C) increase by at most $20,000.
D) decrease or remain unchanged, depending on the value of the real interest rate.
E) decrease, remain unchanged, or increase, depending on the value of the real interest rate.
C
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Refer to the scenario above. Suppose you decide to buy a Toyota Corolla. You value the car for $10,000. You don't know it, but the car dealer values it for $8,500
If you have a zero value for poor-quality cars, what is the most that would you be willing to pay for the car? A) $3,000.50 B) $6,666.67 C) $10,000 D) $5,000
If marginal cost is above the average variable cost, then average variable cost is decreasing
Indicate whether the statement is true or false
In a pure capitalist economy, "what to produce" is determined by
A. government central planning committees. B. the price mechanism. C. the credo: "Each according to his ability, to each according to his needs". D. all of the choices are true.
Government regulators can achieve efficiency for a natural monopoly by setting a price ceiling equal to the intersection of the demand curve and the:
A. marginal revenue curve. B. average cost curve. C. marginal cost curve. D. average fixed cost curve.