The marginal rate of substitution (MRS) determines the rate at which a consumer is willing to substitute between two goods in order to achieve:
A. the same level of satisfaction.
B. a lower level of satisfaction.
C. a higher level of satisfaction.
D. None of the statements is correct.
Answer: A
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Explain the potential costs of high-powered incentives by considering the case of providing incentives to police officers. Would it be a good idea to pay higher wages to police officers if they make more arrests?
What will be an ideal response?
The own-price elasticity of demand is defined as:
a. the ratio of a change in quantity demanded and the change in price. b. the ratio of the percentage change in quantity demanded to the percentage change in price. c. the ratio of the percentage change in quantity demanded to the percentage change in input prices. d. the ratio of a change in output and the change in input usage.
When a government influences the exchange rate of its currency, it is said to be practicing "dirty floating."
a. True b. False Indicate whether the statement is true or false
Matt estimates the marginal benefit of eating one slice of pizza at $3. The marginal benefit of the 2nd slice is $2, the marginal benefit of the third slice is $1, and the marginal benefit of the 4th slice is $0. If the price is $1.50 per slice, to maximize his net benefit Matt should eat:
a. "1 slice." b. 2 slices. c. 3 slices. d. 4 slices.