The greatest global redistribution of income ever recorded occurred in the 1970s as a direct result of
a. a worldwide drop in food prices
b. the OPEC cartel
c. growing international oligopoly
d. a shift from balanced to unbalanced oligopoly
e. a shift from price leadership to kinked demand curve oligopoly
B
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Consider a firm operating in a perfectly competitive market. At its current output of 200 units, marginal revenue is $28 . At this output, average total cost is minimized and equals $25 . Given this information, what should the firm do?
a. Continue to produce 200 units, since costs per unit are minimized b. Increase output beyond 200 units, since this higher output will yield the profit maximizing output level. c. Decrease output below 200 units, since this lower output will result in the profit maximizing output level. d. More information is needed to determine the firm's next step.
A consumer has preferences over two goods, X and Y. Suppose we graph this consumer's preferences (which satisfy the usual properties of indifference curves) and budget constraint on a diagram with X on the horizontal axis and Y on the vertical axis. At the consumer's current consumption bundle, the consumer is spending all available income, and the marginal rate of substitution is greater than
the slope of the budget constraint. We can conclude that the consumer a. is currently maximizing satisfaction subject to the budget constraint. b. could increase satisfaction by consuming more X and less Y. c. could increase satisfaction by consuming less X and more Y. d. could purchase more X and more Y and increase total satisfaction.