The fact that a gallon of gasoline commands a higher market price than a gallon of water indicates that:
a. gasoline is an economic good but water is not.
b. the marginal utility of gasoline is greater than the marginal utility of a gallon of water.
c. the average utility of a gallon of gasoline is greater than the average utility of a gallon of water.
d. the total utility of gasoline exceeds the total utility of water.
b
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Explain how a model can be useful even if it is not realistic
What will be an ideal response?
Noise pollution is a serious problem. One major contributor is the recent development of very powerful amplification equipment for automobile radios. Many people complain that the windows in their home vibrate when some cars drive by. Others complain that loud car radios set off very sensitive alarms in nearby parked cars. What do we know about the drivers of cars with loud stereos?
a. b, c, and e. b. It would be very expensive for them to engage in this behavior if individuals had a right to a nonvibrating home. c. The cost of their own hearing loss is less than the benefit they receive from cranking it up. d. They realize that there are no ordinances prohibiting loud noise. e. Their private costs fall short of the social costs.
Demand deposits are liabilities to a bank because
a. the bank must pay interest on these accounts b. we need some method of creating a balance c. the bank must be willing to account for loans and bonds d. the bank could potentially lose this money if loans are not repaid e. the customers have the right to withdraw the funds from their checking accounts
A nation has a merchandise trade deficit when
a. it has a surplus in its balance of payments. b. it has a deficit in its balance of payments. c. the value of its imports of goods is greater than the value of its exports of goods. d. its current account is in surplus and its capital account is in deficit.