Explain the concept of diminishing marginal utility, and describe the role that it plays in the utilitarian argument for the redistribution of income
Diminishing marginal utility refers to the principle that as a person's income rises, the extra well-being derived from an additional dollar of income falls. The utilitarian argument of redistribution from rich to poor hinges on the fact that a dollar of additional income to the poor is valued more than a dollar of additional income to the rich. If this is not true, then the transfer from rich to poor would actually reduce the well-being of society.
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The saving function is
A) cY. B) Y - T. C) (1 - c)(Y - T). D) -a + (1 - c)(Y - T).
At a price of $4.50/pound, people buy 55 pounds of chocolate cream candy. At a price of $5.50/pound, people buy 45 pounds of chocolate cream candy. What is the arc elasticity of demand for chocolate cream candy in this price range?
a. 1.0 b. 10.0 c. 0.1 d. 0.67 e. none of the above
Figure 10-17
With the passage of time, which of the following will tend to direct this economy in toward its long-run sustainable rate of output?
a.
lower interest rates that will stimulate AD and lower resource prices that will increase SRAS
b.
higher interest rates that will reduce aggregate demand and higher resource prices that will reduce SRAS
c.
lower interest rates and higher resource prices, both of which will stimulate aggregate demand
d.
higher interest rates that will reduce SRAS and lower resource prices that will stimulate aggregate demand
A market with many firms that sell goods and services that are close substitutes for one another is called:
A. perfect competition. B. monopolistic competition. C. oligopoly. D. monopoly.