Describe the consumption schedule.
What will be an ideal response?
The consumption schedule shows the relationship between the consumption and disposable income. Graphically this relationship is illustrated with consumption measured on the vertical axis and disposable income measured on the horizontal axis. If the two were equal, the relationship would follow a straight line along the 45-degree line. However, historical data suggest that it is a direct relationship, and that households spend a larger proportion of a small income than of a large disposable income. In other words, consumption falls as a proportion of income as disposable income increases.
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Comparative advantage implies choosing the activity that
A) has a high opportunity cost. B) is inside the production possibilities frontier. C) has the lowest opportunity cost. D) does not demand any specialization.
Which of the following contracts is considered self-enforcing?
a. An assurance provided by a lawyer to his/her client to win a case. b. A futures contract purchased through a NYSE broker. c. An agreement between two oligopolists to follow uniform pricing strategy. d. An agreement between two students to share assignment responsibility.