Charlie's income went from $1000 per week to $1500 per week. As a result he increased his consumption of beef from 1 pound a week to 3 pounds a week. Based on his consumption patterns, the income elasticity of beef for Charlie is
A) 2.50.
B) -.50.
C) .50.
D) -1.50.
Answer: A
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If a firm is a natural monopoly, competition from other firms cannot be counted on to force price down to the level where the company earns zero economic profit. How are prices usually set in natural monopoly markets in the United States?
A) Natural monopolies are privately owned and are allowed to set their own prices. Government regulation of the firms would result in greater deadweight losses. B) Local or state regulatory commissions usually set prices for natural monopolies. C) Natural monopolies are privately owned, but prices proposed by the firms must be approved by the Antitrust Division of the Department of Justice. D) Each natural monopoly is made a public franchise. The public franchise is then required to set its price equal to its marginal cost.
If the deficit is financed by selling bonds to the ________, the money supply will ________, increasing aggregate demand, and leading to a rise in the price level
A) public; rise B) public; fall C) central bank; rise D) central bank; fall
Marginal cost is the
A. change in total cost resulting from the purchase of one more unit of the variable input. B. change in total cost resulting from the production of one more unit of output. C. difference between total fixed cost and total variable cost. D. difference between total cost and total expenditure.
A change in taxes of a given amount shifts the consumption function vertically by ____ than that amount, because the marginal propensity to consume is ____
a. less; less than 1 b. greater; greater than 1 c. greater; always equal to 1. d. less; equal to zero.