Use the following consumption schedule to answer the next question.
The graph above shows the relationship between consumption and income. The ratio LM/PL would be a measure of the
A. average propensity to consume.
B. marginal propensity to consume.
C. marginal propensity to save.
D. average propensity to save.
Answer: B
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Suppose Paraguay can produce 12 wheat or 3 corn. Suppose Bolivia can produce 4 wheat or 2 corn. Suppose opportunity costs are constant. Given these production possibilities,
A) Paraguay has a comparative advantage in wheat. B) Paraguay has a comparative advantage in corn. C) Paraguay has a comparative advantage in both goods. D) Paraguay has an absolute advantage in neither good.
Suppose Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called
a. a resistance price. b. willingness to pay. c. consumer surplus. d. producer surplus.