In the quintile distribution of income, the term "quintile" represents:
A. 5 percent of the income receivers.
B. 10 percent of the income receivers.
C. 20 percent of the income receivers.
D. 25 percent of the income receivers.
Answer: C
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In the graph for the consumption function, the 45-degree line
A) contains only a consumption component. B) represents both planned consumption and planned investment. C) shows various combinations where planned consumption equals real disposable income. D) reflects a decreasing APC as real disposable income rises.
Which of the following is a problem that arises when regulations force "natural monopolies," like electric utilities, to charge a price that is equal to their marginal cost (MC)?
a. This price will force the firms out of business in the long run. b. The firms have an incentive to pad their fixed costs. c. When price is equal to MC, new firms will enter the industry and drive up the costs of production. d. Both b and c are correct.