Economists assume that the goal of consumers is to
A) do as little work as possible to survive.
B) make themselves as well off as possible.
C) spend all their income.
D) consume as much as possible.
Answer: B
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If we compare the four sources of spending in the economy we see that
A) household consumption is the smallest. B) government expenditure is the largest. C) business investment is the largest. D) household consumption is the largest.
Jan's Dry Cleaning holds $10,000 on a typical day, although only $2,000 is essential for carrying out business. Making a midday deposit is estimated to reduce cash holdings to $8,000 and cost an extra $80 per year in lost production. If, in addition, an armored car service is engaged to pick up cash more frequently for a fee of $120 per year, cash holdings will be further reduced to $6,000 per day. Employing a computerized cash management service for an annual fee of $180 would reduce cash holdings further to $4,000. If any reduction in cash holdings will be invested in government bonds earning 7 percent, then how much money should Jan's hold?
A. $4,000 B. $10,000 C. $6,000 D. $8,000
Alex, Kara, and Susie are the only three people in a community and Alex is willing to pay $20 for the fifth unit of a public good; Kara, $15; and Susie, $25. Government should produce the fifth unit of the public good if the marginal cost is less than or
equal to: A. $25. B. $15. C. $60. D. $300.
A monetary shock of a given size has a larger real effect:
a. the more it is anticipated by the public b. the more fully it is explained and communicated to the public c. the more stable the underlying monetary environment. d. all of the above.