"If an individual is to maximize the utility received from consumption, he or she should spend all available income. . . .". This statement assumes
a. that saving is impossible.
b. that the individual is not satiated in all goods.
c. that no goods are "inferior.".
d. Both a and b.
d
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Regulation of a natural monopoly will maximize the sum of consumer surplus and producer surplus if the firm is regulated with
A) an average cost pricing rule. B) a marginal cost pricing rule. C) rate of return regulation. D) All of the above answers are correct.
Is a uniform per-unit tax on firms that cause an externality an optimal policy for correcting the externality? Explain
What will be an ideal response?
The change in the unemployment rate is approximately equal to
A) the negative of the growth rate of output. B) the negative policy rate. C) the negative inflation rate. D) the negative of the growth rate of money supply.
Disposable personal income equals personal income
A) minus personal tax payments plus government transfer payments. B) plus government transfer payments. C) minus personal tax payments. D) minus government transfer payments plus personal tax payments.