The marginal benefit of acquiring additional information tends to
a. be zero if the marginal cost of information is zero
b. increase and then decrease as additional information is obtained
c. be smaller, the smaller the quantity of information the individual already has obtained
d. increase as additional information is obtained
e. decrease as additional information is obtained
E
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Refer to Figure 28-2. Suppose the economy is at point B in the figure above. Which of the following is true?
A) The economy is producing at potential GDP. B) The expected rate of inflation is 3%. C) The natural rate of unemployment is 3.8%. D) The current unemployment rate is 5%. E) Expected inflation and actual inflation are the same.
If an economy were experiencing a high rate of unemployment as the result of insufficient aggregate demand, a Keynesian economist would favor:
A. an increase in taxes coupled with a reduction in government expenditures of equal size. B. an increase in taxes. C. a reduction in taxes, without any offsetting reduction in government expenditures. D. maintenance of a balanced budget.