The table below shows how the marginal benefit of car washes varies for Carol with the number purchased per month.Car washes per monthMarginal benefit of purchasing an additional car wash1$6.002$5.003$4.004$3.005$2.00The price of each car wash is reduced from $2.99 to $1.99. Assuming that the price of a car wash accurately reflects the marginal cost to Carol and that she is rational, she will increase the number of car washes purchased per month from:
A. one to two.
B. two to three.
C. three to four.
D. four to five.
Answer: D
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Suppose the government of New Country has fixed the value of its currency, the New Peso, at $1 per New Peso, but the market equilibrium value of the New Peso is $2 per New Peso. In order to maintain the official value of the New Peso the Central Bank of New Country must either ________ domestic interest rates, or ________the supply of international reserves by purchasing New Pesos
A. lower; decrease B. lower; increase C. raise; decrease D. raise; increase
What characterized the 1950–1962 economy (from the Korean War to the last year of John F. Kennedy's presidency)?
(a) Significant inflation (b) Deflation (c) High unemployment (d) Falling prices and wages
When the demand for grapes increases and the supply of grapes decreases at the same time, we can predict that the: a. price of grapes will fall
b. price of grapes will rise. c. quantity of grapes exchanged will fall. d. quantity of grapes exchanged will rise.
The classical dichotomy refers to the idea that the supply of money
a. is irrelevant for understanding the determinants of nominal and real variables. b. determines nominal variables, but not real variables. c. determines real variables, but not nominal variables. d. is a determinant of both real and nominal variables.