An assumption underlying indifference curve analysis is that MUx/MUy ________ as more of X and less of Y is consumed.
A. always equals one
B. remains constant
C. decreases
D. increases
Answer: C
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Long-run equilibrium under monopolistic competition requires that
A. the demand curve intersects the average cost curve. B. the demand curve be tangent to the average cost curve. C. price be equal to marginal cost. D. quantity produced be at the point where average cost is at a minimum.
Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
A decrease in consumer confidence will cause a:
A. movement downward along the aggregate demand curve. B. shift in aggregate demand to the right. C. shift in aggregate demand to the left. D. movement upward along the aggregate demand curve.
If capacity utilization by businesses remains constant, investment spending is likely to be the most volatile component of aggregate expenditures in the United States
a. True b. False Indicate whether the statement is true or false