Suppose society consists of three individuals: Phil, Jay, and Mitchell. Phil has $60,000 of income, Jay has $200,000 of income, and Mitchell has $100,000 of income. A utilitarian would argue that
a. taking $1 from Mitchell and giving it to Phil would increase society's total utility.
b. taking $1 from Mitchell and giving it to Jay would increase society's total utility.
c. taking $1 from Phil and giving it to Jay would increase society's total utility.
d. None of the above are correct because all three individuals have sufficient income.
a
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Which of the following helps explain how the multiplier and crowding-out effect impact the size of the shift in aggregate demand from a tax change
a. Tax cuts stimulate consumer spending, earnings and profits rise, which further stimulates consumer spending—the multiplier effect. b. The higher income leads to an increase in the demand for money, which tends to lead to higher interest rates. c. The higher interest rates make borrowing more costly and reduce investment spending—the crowding-out effect. d. All of the above
Suppose Island Bikes, a profit-maximizing firm, is the only bike rental company in a small resort town. The marginal cost to Island Bikes of renting out a bike is $3, and Island Bikes has no fixed costs. Each day Island Bikes has six potential customers, whose reservations prices are listed below.CustomerReservation Price($/Rental)A22B16C12D8E6F4 If Island Bikes charges a single price to all of its customers, then how many bikes will it rent out each day?
A. 5 B. 4 C. 3 D. 6