When OPEC caused the price of oil to rise in the early 1970s, the:
a. aggregate supply curve shifted to the right.
b. aggregate supply curve shifted to the left.
c. aggregate demand curve shifted to the right.
d. aggregate demand curve shifted to the left.
e. price level in the economy fell.
b
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Comment on the following statement: "Diminishing marginal utility means that total utility falls when an additional unit of a good is consumed."
What will be an ideal response?
Two college students, Mary and Maggie, are spending spring break in Florida. Mary buys a cup of coffee each morning at the local Starbucks rather than from one of the local coffee shops. Maggie claims that Mary is irrational because she never purchases Starbucks coffee at home, and Starbucks coffee costs more than the coffee sold by local shops. An economist would most likely explain Mary's
behavior by suggesting that a. Mary's behavior is rational, but Maggie's behavior is clearly irrational. b. Mary's behavior is clearly irrational, but Maggie's behavior is rational. c. the Starbucks brand name suggests consistent quality. d. the advertising by Starbucks in Florida is more persuasive than the advertising by Starbucks in Mary and Maggie's home town.