If the marginal utility of a gallon of milk to consumers is $2.50 and the MC of producing the gallon of milk is $1.50, then
A. the value of the resources used up in producing one more gallon of milk would be $1 less than the money value of the additional gallon to consumers.
B. society could be made better off by expanding the output of milk.
C. resources are not being used most efficiently.
D. All of the above are true.
Answer: D
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Throughout the 1970–2007 period, government's share of the increasing GDP was no more than a few percentage points away from
a. 10 percent of GDP b. one quarter of GDP c. one third of GDP d. one half of GDP e. two thirds of GDP
A fundamental aspect of economics is to
A) ensure that every firm makes a profit. B) analyze how choices are made. C) satisfy all our wants. D) make sure that our resources will always be unlimited.
Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive.
If the market supply curve is given by S3, then what will happen to the market supply curve in the long run?
A. It will shift to S1. B. It will shift to S2. C. It will stay at S3, but the quantity supplied will increase. D. It will stay at S3, but the quantity supplied will decrease.
Which of the following can cause inflation?
A. increases in long-run aggregate supply B. decreases in short-run aggregate supply C. increases in short-run aggregate supply D. decreases in aggregate demand