Exhibit 8-2 Consumption function
As shown in Exhibit 8-2, saving occurs:
A. at 0 disposable income.
B. between $0 and $4 trillion disposable income.
C. at $4 trillion disposable income.
D. at a disposable income greater than $4 trillion.
Answer: D
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The diamond-water paradox of value can be explained by
A) distinguishing between total utility and marginal utility. B) water's high level of utility relative to diamonds. C) water's low price relative to diamonds. D) the fact that utility cannot be measured.
Since the War on Poverty was started in 1965, the United States has spent more than $12 trillion on income maintenance programs. The effect has been to
A) reduce poverty levels substantially. B) reduce poverty levels moderately. C) have virtually no effect on poverty levels. D) increase poverty substantially.
Which country has the highest health care spending as a percent of gross domestic product?
a. Japan b. Switzerland c. Canada d. Germany e. United Kingdom
A budget constraint shows
A) all of the combinations of sets of goods that yield the same level of satisfaction. B) all of the possible combinations of goods that can be purchased with a specific budget. C) all of the goods the consumer gets positive marginal utility from when the goods are consumed. D) all of the goods that a consumer substitutes for other goods when prices fall.