Why does your marginal rate of substitution between chocolate and vanilla ice cream decline continuously as you move rightward on your indifference curve between the two?
What will be an ideal response?
With chocolate on the vertical axis and vanilla on the horizontal, as you move rightward along your indifference curve, the more chocolate you give up and the less you have remaining. As a result, you grow to value your chocolate more and more and your vanilla less and less. You therefore become willing to give up less chocolate to get more vanilla.
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The level of real GDP the economy produces at full employment is
A) never reached in reality. B) nominal GDP. C) called the Lucas level. D) real GDP. E) potential GDP.
Suppressed technologies
A) is what lead to the development of internet search engines. B) means that price controls are needed for corporate control. C) means that new inventions always are introduced by entrepreneurs. D) means that firms often hide threatening new inventions.
Which of the following reflects an increase in unemployment?
A) an increase in the labour force participation rate B) an increase in the involuntary part-time rate C) a decrease in the unemployment rate D) an increase in the employment-to-population ratio E) none of the above
Suppose the economy's production function is Y = AK0.3N0.7. If K = 2000, N = 100, and A = 1, then Y = 246. If A rises by 10 percent, and K and N are unchanged, by how much does Y increase?
A. 5% B. 20% C. 15% D. 10%