The reason that diamonds cost more than water is
A) the marginal utility of each diamond a consumer purchases is quite high due to the small amount of diamonds that most consumers purchase.
B) most consumers consume little water.
C) diamonds are more beautiful than water.
D) water is a necessity.
Answer: A
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Economies of scale exist as a firm increases its size in the long run because of all of the following except
A) as a larger input buyer, the firm can purchase inputs at a lower per unit cost. B) as a firm expands its production, its profit margin per-unit of output increases. C) the firm can afford more sophisticated technology in production. D) labor and management can specialize even further in their tasks.
In the model of the money supply process for M2, the relationship between checkable deposits and the M2 money supply is represented by
A) D = × M2. B) D = (1 + c + t + mm) × M2. C) M2 = × D. D) M2 = .