When a U.S. company shifts its call-center operations overseas to reduce costs, it is applying the economic concept of:
A. thinking at the margin.
B. comparative advantage.
C. diminishing returns.
D. using assumptions to simplify.
Answer: B
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If disposable income increases by $500 million, and consumption increases by $400 million, then the marginal propensity to consume is
A) 1.25. B) 0.8. C) 0.6. D) 0.4.
The idea that a permanent increase in income causes a larger increase in consumption than a temporary change in income is called the
A) Friedman-Lucas theory. B) permanent income hypothesis. C) Ricardian equivalence theorem. D) intertemporal substitution effect.
Using potentially productive resources to try and obtain transfers from the government is called _____
a. vote trading b. logrolling c. agenda control d. rent seeking
Suppose the residents of Metropolis travel to work either by bus or train. If the price of train tickets increases, then:
A. the demand for bus tickets will increase. B. the demand for train tickets will decrease. C. the demand for bus tickets will decrease. D. the demand for train tickets will increase.