If the MPC is 0.8 and disposable income shrinks by $100 million. Consumption would
a. rise by $8 million
b. rise by $80 million
c. fall by $80 million
d. fall by $8 million
e. fall by $20 million
C
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Recall the text's discussion of the ten largest U.S. industries by value added in 1860 and 1910 . The emergence of tobacco products and malt liquors as major industries by 1910 suggests that
a. these goods are highly income elastic. b. these goods are highly income inelastic. c. these goods are price inelastic. d. these goods exhibit economies of scale in production.
Selling tickets to graduation ceremonies has long been a tradition among students at institutions that limit the number of guests. Suppose your classmate, Heidi, purchased two tickets for $40 each. Is this transaction economically efficient?
A) No, people should never be allowed to sell items they received for free. B) Yes, it was a voluntary exchange that benefited both parties. C) No, Heidi paid too much for the tickets. D) Yes, it is efficient only from the perspective of the seller and not from the perspective of the buyer.