If the government decreases the tax on cell phones, ________
A) the deadweight loss decreases
B) the consumer surplus does not change because sellers will not lower the price of a cell phone
C) the number of cell phones purchased does not change
D) the market becomes less efficient because the government collects less tax revenue
A
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Suppose that after disposable income increases by $500 billion, consumption expenditures increase by $450 billion. Therefore, the marginal propensity to consume would be
a. 1.11 b. 9.00 c. 0.09 d. 0.90 e. 0.82
Advocates of the minimum wage admit that it has some adverse effects, but they believe that these effects are small and that a higher minimum wage makes the poor better off
a. True b. False Indicate whether the statement is true or false
An efficient allocation of risk among employees and owners must:
A. recognize that pooling of risks is never appropriate. B. recognize that employees have full control over their output. C. take into account that performance-based incentives are the sole important component of an employee's salary. D. take into account that attitudes toward risk differ among different people.
Which of the following questions would require positive analysis?
a. If the price of cotton increases by 5 percent, should we buy a new harvester? b. If the price of cotton increases by 5 percent, how much cotton should we farm? c. If the price of cotton decreases by 6 percent, what effect will this have on demand? d. If the price of cotton decreases by 6 percent, should we plant more wheat?