Suppose the government of Erbia imposes an income tax of 30 percent. If the base consumption of a consumer is $1,000 and the marginal propensity to consume is 0.8, then the total consumption of the consumer at an income of $5,000 will be _____
a. $2,600
b. $7,900
c. $5,900
d. $3,800
d
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Which of the following statements is false?
A) Between 1980 and 2006, the index of openness has risen for most countries. B) Since 1950, international trade has been growing faster than the growth of world output. C) A country cannot be a leading world exporter without a high index of openness. D) Two of the above are true.
Collusion among firms to raise price is rare in monopolistically competitive markets because
a. there are too many firms b. there are too few firms c. there is only one firm d. products are homogeneous e. price leadership is used instead
Which of the following is an explicit cost?
a. The opportunity cost of an owner/entrepreneur's time invested in the firm. b. The opportunity cost of the money the business owner/entrepreneur has invested in the firm. c. The wages paid to workers. d. None of the above.
Which of the following statements about opportunity costs is TRUE?
I. The opportunity cost of a given action is equal to the value foregone of all feasible alternative actions. II. Opportunity costs only measure direct out of pocket expenditures. III. To calculate accurately the opportunity cost of an action we need to first identify the next best alternative to that action. a) III only. b) I and III only. c) II only. d) None of the statements is true.