Which of the following is the definition of autonomous consumption spending?
a. The effect of a change in wealth on consumption spending
b. The part of consumption spending that is independent of disposable income
c. The impact of disposable income on consumption spending
d. The part of consumption spending that is independent of wealth
e. The horizontal intercept of the consumption function
B
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Tom and Jerry are the only members of society. The table above shows their marginal benefits from defense satellites, a public good. If the marginal social cost of a satellite is $95, the efficient quantity of satellites is
A) 0. B) 1. C) 2. D) 3.
When constructing an economic model, economists
a. rely mostly on their own value judgments and ignore the far more complex world of facts b. always try to duplicate reality by including all available information c. use assumptions that are true for the individual but never true for the whole economy d. must rely on simplifying assumptions that abstract from the complexity of the real world e. are primarily concerned with making realistic assumptions