Which of the following combination of inputs is most closely reflective of decreasing marginal rate of technical substitution (MRTS)?
A) oil and natural gas
B) sugar and high fructose corn syrup
C) computers and clerks
D) keyboards and computers
C
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Assume that when the price of good Z is increased from $5 to $6, the total revenue earned increases from $600 to $690. Based on this information, we can conclude that over this range, demand for Z is:
A) elastic. B) unit elastic. C) inelastic. D) perfectly inelastic.
Assume the marginal propensity to consume (MPC) is 0.75 and the economy is in recession with real GDP $1 trillion below full-employment real GDP. To achieve full employment, aggregate demand (AD) must be increased $2 trillion. Following discretionary fiscal policy, government spending should be increased:
a. $0.25 trillion. b. $1 trillion. c. $0.5 trillion. d. $2 trillion.