Brad ate four bags of chips at the baseball game. The first bag tasted best, but he found that as he ate more chips the amount of extra satisfaction he was receiving was beginning to fall. This would demonstrate
A. the law of diminishing costs.
B. the law of diminishing marginal utility.
C. the law of total utility maximization.
D. the law of zero utility.
Answer: B
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Refer to Figure 9-3. Without the quota, the domestic price of peanuts equals the world price which is $2.00 per pound. What is the quantity of peanuts demanded by domestic consumers in the absence of a quota?
A) 10 million pounds B) 28 million pounds C) 30 million pounds D) 40 million pounds
An increase in supply is graphically represented by a leftward shift of the supply curve
Indicate whether the statement is true or false
Defining the "relevant market" involves looking at two components. They are
A) the competitive market and the dominant market. B) the local market and the national market. C) the geographic market and the product market. D) the goods market and the services market.
Refer to the above figure. Suppose the economy is in long-run equilibrium at point A, and the government initiates an expansionary monetary policy to increase aggregate demand. Which of the following is a TRUE statement concerning the differences between what happens when the central bank action is unanticipated and when it is anticipated?
A. The new long-run equilibrium is point C in either case. When the increase in aggregate demand is unanticipated, the new short-run equilibrium is point B, but when the increase in aggregate demand is anticipated the new short-run equilibrium is point D. B. The new long-run equilibrium when the increase in aggregate demand is unanticipated is point B while the new long-run equilibrium when the increase in aggregate demand is anticipated is point A. C. The new long-run equilibrium will be point C in either case. When the increase in aggregate demand is unanticipated, the economy moves to B in the short run, but when the increase in aggregate demand is anticipated, short-run aggregate supply shifts when the aggregate demand curve shifts, and the economy moves immediately to point C. D. The new long-run equilibrium when the increase in aggregate demand is unanticipated is point B while the new long-run equilibrium when the increase in aggregate demand is anticipated is point C.