Refer to the accompanying figure.Suppose Zeynep's budget constraint is initially given by BC1. If her budget constraint shifts to BC2, this could be the result of:
A. a decrease in the price of cheese sandwiches and an increase in the price of ham sandwiches.
B. a decrease in the price of cheese sandwiches and an increase in income.
C. an increase in the price of cheese sandwiches and a decrease in income.
D. an increase in the price of cheese sandwiches and a decrease in the price of ham sandwiches.
Answer: B
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An income tax to pay for national defense can approximate a _____ if there is a close relationship between income and _____
a. user charge; wealth b. unit tax; wealth c. user charge; consumption d. sales tax; consumption
If a firm's average cost is declining, setting price equal to marginal cost will
a. maximize the firm's profits. b. minimize the firm's losses. c. guarantee that the firm will lose money. d. help the firm earn the opportunity costs of its resources.