Suppose there was a debate regarding how to spend $1 billion in newly found revenues in the budget. Suppose the most liberal Democrat suggests an increase to Food Stamp (SNAP) allotments. Suppose the most conservative Republican suggests an increase in defense spending. The Republican says that, on average, military spending does the most good, so more is better. The Democrat is arguing that the extra food purchased by the extra spending will increase well-being the most. What is going on here?
A. Only the Democrat is using marginal analysis.
B. Both are employing marginal analysis, just from different perspectives.
C. Neither are using marginal analysis.
D. Only the Republican is using marginal analysis.
Answer: A
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Refer to Table 4-6. The table above lists the marginal cost of polo shirts by Marko's, a firm that specializes in producing men's clothing. If the price of polo shirts increases from $15 to $20
A) the marginal cost of producing the third polo shirt will increase to $20. B) there will be a surplus of polo shirts. C) producer surplus will rise from $13 to $28. D) consumers will buy no polo shirts.
Expenditures on a nation's domestic production
a. are less than its domestic production. b. are equal to its domestic production. c. are greater than its domestic production. d. could be less than, equal to, or greater than its domestic production.