What is the consumption function? What factor leads to a movement along the consumption function?
What will be an ideal response?
The consumption function is the relationship between disposable income and the amount of consumption expenditure, other things remaining the same. A change in disposable income results in a movement along the consumption function.
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When a good is imported, the domestic production of it ________ and the domestic consumption of it ________
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases E) increases; does not change
Given the information in the table above. If these two countries trade these two goods in the context of the Ricardian model of comparative advantage, then what is the lower limit of the world equilibrium price of widgets?
What will be an ideal response?
Some argue that "financing an investment with your own personal funds is always less expensive than borrowing the funds from a bank because it's an interest-free loan.". To an economist, this argument
a. is true because borrowed funds involve an explicit cost, while use of one's own funds involves only an implicit cost b. ignores the opportunity cost associated with using one's own funds c. is false because the bank can always match the interest rate offered on the loanable funds market d. is true only if the investment generates less revenue than the revenue generated by the interest-bearing deposit in the bank e. ignores the cost of sacrificing present consumption
A firm that is a "pure monopoly" is
a. a seller of a highly advertised and differentiated product in a market with low barriers to entry in the long run. b. the only seller of a good for which there are no good substitutes in a market with high barriers to entry. c. the only buyer of a unique raw material. d. the producer of a product subsidized by the government.