Define the following terms completely and concisely
a. marginal revenue
b. average revenue
c. optimal decision
d. satisficing
e. marginal profit
a. Marginal revenue is the addition to total revenue resulting from the addition of one unit to total output. Marginal revenue, in geometrical terms, is the slope of the total revenue curve.
b. Average revenue is total revenue divided by quantity. The average revenue curve is another name for the demand curve.
c. An optimal decision is one which, among all the decisions that are actually possible, is best for the decision maker.
d. Satisficing is making decisions that are satisfactory, given the amount of information available, but which may in reality not be the best decisions if all facts were known. The cost of data gathering is thought to force business and government to satisfice.
e. Marginal profit is the additional profit resulting from the sale of one additional unit of output.
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The money supply is $6 million, currency held by the nonbank public is $2 million, and the reserve—deposit ratio is 0.1. The monetary base is equal to
A) $2 million. B) $2.4 million. C) $2.6 million. D) $4 million.
In the monetarist model, an increase in both government spending and taxes would
a. lead to a large increase in interest rates. b. increase income dollar for dollar with the increase in government spending. c. have a much smaller impact on income than in the Keynesian model. d. all of the above.