Which of the following examples best describes the Law of Diminishing Marginal Benefit?
A) If a seller of notebooks in a perfectly competitive market charges above the market price, his profit decreases.
B) With each additional pen Jill buys, her willingness to pay for another pen decreases.
C) Each additional unit of ice cream that John consumes gives him more and more satisfaction.
D) If the weather gets cold, the demand for ice cream will fall.
B
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If you deposit $1,000 in cash in your checkable deposit at your bank, the quantity of M1 immediately
A) increases by $1,000. B) decreases by $1,000. C) does not change in size. D) increases by $2,000. E) changes, but more information about the required reserve ratio is necessary to determine the amount of the change.
One signal that the U.S. dollar was overvalued in the early 1970s was
a. the stable price of gold b. the volume of international trade c. the recurring balance of trade deficits in the United States d. the recurring balance of trade deficits in European countries e. reduced deposits in the World Bank