What are the relationships among consumption, saving, and disposable income?
What will be an ideal response?
Disposable income equals consumption plus saving. If consumption is less than disposable income, the difference is saving. There is a positive or direct relationship between consumption and disposable income (after-tax income) because as disposable income increases so does consumption. There is a positive relationship between saving and disposable income because as disposable income rises so does saving. Disposable income is the most important determinant of both consumption and saving.
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In the above figure, if a single-price monopolist charges the profit-maximizing price, the triangle dce represents
A) consumer surplus. B) producer surplus. C) deadweight loss. D) marginal revenue.
Because of the adverse selection problem
A) good credit risks are more likely to seek loans causing lenders to make a disproportionate amount of loans to good credit risks. B) lenders may refuse loans to individuals with high net worth, because of their greater proclivity to "skip town." C) lenders are reluctant to make loans that are not secured by collateral. D) lenders will write debt contracts that restrict certain activities of borrowers.
Adding more resources causes:
A. downward movement along a production possibilities curve. B. the production possibilities curve to shift in. C. upward movement along a production possibilities curve. D. the production possibilities curve to shift out.
Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. If Chris and Tony both decide to specialize and produce only the good in which they have a comparative advantage, then
A. Both Chris and Tony will produce only tomatoes. B. Chris will produce only tomatoes and Tony will produce only sauce. C. Both Chris and Tony will produce only sauce. D. Chris will produce only sauce and Tony will produce only tomatoes