Bundles that lie above the indifference curve are preferred to bundles that lie below. This is an example of
A. completeness.
B. transitivity.
C. more is better.
D. convexity.
Answer: C
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Refer to the given table. Suppose the columns in this table reflect demand and supply. At a price of $30:Price Per UnitColumn A Units Per YearColumn B Units Per Year$2010040$309550$408060$506570$605080
A. there will be an excess demand of 95 units. B. there will be an excess demand of 45 units. C. there will be an excess supply of 45 units. D. the market will be in equilibrium.
Perfect competition means that firms are
A. powerful sellers. B. price makers (firms set the price of the market). C. unable to make normal profits. D. price takers (firms must accept the price of the market).
If an economy's MPC is 0.75 and the MPM is 0.25, then an increase in government spending of $2,000 will increase income by
A. $2,100. B. $3,000. C. $4,000. D. $8,000.
The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.