Consumer equilibrium exists when:
A. the marginal utility of each good and service consumed is equal.
B. the total utility of each good and service consumed is equal.
C. the marginal utility of each good and service consumed equals its price.
D. ratio of marginal utility to price for all goods and services is equal.
Answer: D
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The U.S. Gini ratio for income has ________ within recent decades, which means economic inequality has ________
A) decreased; increased B) decreased; decreased C) increased; decreased D) increased; increased
In the Keynesian model, a decrease in real autonomous spending results in a more than proportional decrease in real Gross Domestic Product (GDP) because
A) consumption decreases as a result of lower real disposable income. B) consumption increases while real disposable income decreases. C) real autonomous spending decreases further as real disposable income decreases. D) government spending also decreases.
Changes in relative prices during inflationary periods usually lead to
a. decreases in real income. b. some people gaining real income. c. increases in the purchasing power of money. d. increases in real income.
You are given the following short-run information for an individual firm. Labor (L) is the only variable input. The price of labor is $200/week. Fixed costs are $100/week. Complete the rest of the table. Describe the relationship between the MP and
MC. At which output level does the law of diminishing returns set in?
