When prices drop in response to a decline in demand for an increasing cost industry:
a. producer surplus will increase but rents may decrease.
b. rent earned by elastically supplied inputs will decline by more than rent earned by inelastically supplied inputs.
c. rent earned by elastically supplied inputs will decline by less than rent earned by inelastically supplied inputs.
d. both producer surplus and rents will increase.
c
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Marginal cost is calculated for a particular increase in output by
A) dividing the change in total cost by the change in output. B) dividing the total cost by the change in output. C) multiplying the total cost by the change in output. D) multiplying the change in total cost by the change in output.
If we know that the slope of the consumption function is 0.6, then we know that if real disposable income increased by $1,000 billion, real consumption spending would
a. increase by $60 billion b. increase by $1,000 billion c. increase by $600 billion d. increase by $6,000 billion e. decrease by $6 billion