If MRS > MRT, then the consumer is better off than at equilibrium
Indicate whether the statement is true or false
False. MRS > MRT implies that the consumer values the next unit of "x" more than it costs to obtain it. That is, there is a gain from trade to be made. As more "x" is purchased, MRS falls and eventually MRS = MRT. At this point, all gains from trade have been made.
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Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher
A lump-sum tax:
A. takes the same percentage of taxes from income from all taxpayers. B. requires those with low incomes to pay a smaller percentage of their income than high-income people. C. is levied so that low-income taxpayers pay a greater proportion of their income toward taxes than high-income taxpayers. D. taxes everyone the same amount, regardless of their income.
There is much world concern over the deteriorating condition of the Pyramids and other historical structures in Egypt. While people of all nations enjoy visiting these structures, there has been little financial support for preservation coming from within Egypt or from elsewhere. Economists would describe this as an example of
a. an externality. b. a public good. c. a free rider problem. d. imperfect information.
The net result of increased quantities of the factors of production should be: (check all that apply)
a. economic stagnation b. expanded potential output c. economic growth d. inflation e. equal production amounts of both consumer goods and capital goods