When a family's income is low and it is spending more on consumption than it is receiving in income
A. some segment of the consumption function curve lies above the 45-degree line, indicating dissaving.
B. the APC must be equal to the ratio of planned consumption expenditure to total saving.
C. the APC must be increasing.
D. the MPC must be zero.
Answer: A
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The United States can produce 1,000 shoes if it specializes in shoe production. Alternatively, it can produce 500 shirts. Taiwan can produce 500 shoes or 200 shirts. Explain which country will specialize in shoe production and which in shirt production. What are the possible terms of trade?
Firms in a given industry are affected by the tariff imposed on the product they sell, but not by the tariffs imposed on their purchased inputs.
Answer the following statement true (T) or false (F)
A perfectly elastic demand:
A. is demonstrated by a vertical demand curve. B. has a price elasticity of -1. C. means consumers are extremely sensitive to a change in price. D. means quantity demanded is unchanged if the price changes by any amount.
According to the capture hypothesis of regulation
A) regulation favors producers over consumers because the producers were able to pay off the regulators. B) regulation eventually favors producers over consumers because the producers have more at stake than individual consumers. C) regulation benefits the regulators and the legislators who support the regulation by enabling them to obtain favors from both producers and consumers. D) regulation benefits the consumers over producers because the number of consumers is greater than the number of producers, giving the consumers more political clout.