Johnny consumes only bread and milk. Suppose the quantity of milk is measured along the horizontal axis. If the price of milk rises, his budget constraint will
A. shift inward.
B. rotate inward along the horizontal axis.
C. rotate inward along the vertical axis.
D. shift outward.
Answer: B
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The deadweight loss represents the sum of additional consumer and producer surplus should the firm produce the quantity where P = MC rather than where MR = MC
What will be an ideal response?
Most empirical studies show that the cost-savings provided by managed care are accomplished by
a. better preventive care. b. reducing the rate of hospitalization. c. denying access to costly specialty care. d. switching to generic drugs. e. all of the above.
In a market economy, _____ own(s) all the basic resources or factors of production
a. households b. the federal government c. the Federal Reserve bank d. the local government e. business firms
Profit is maximized at the output at which marginal revenue equals marginal cost
a. True b. False Indicate whether the statement is true or false