The marginal propensity to consume is
a) identical to the average propensity to consume
b) the inverse of the marginal propensity to save
c) the slope of the consumption function
d) the inverse of the expenditure multiplier
e) equal to the income tax rate
c) the slope of the consumption function
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As the price level ________, the purchasing power of money ________
A) decreases; stays the same B) increases; decreases C) decreases; decreases D) increases; increases
How should a natural monopoly be regulated under the social interest theory of regulation?
A) by setting price equal to the average cost of production B) by allowing a price that maximizes the profit of the natural monopoly C) by using a marginal cost pricing rule D) by subsidizing other producers to compete with the monopoly E) by using rate of return regulation
For which of the following goods is the income elasticity of demand likely to be largest?
a. poultry products b. meals at restaurants c. lemonade d. used books e. paperback mystery novels
The advantages that arise from economies of scale make entry difficult for new firms. As a result, monopolies and oligopolies are often associated with __________ and ___________
a. b and e b. low costs; high prices c. low costs; low prices d. antitrust; laissez-faire e. competition; high prices