Consumer equilibrium occurs where the budget line is tangent to the a. lowest possible indifference curve. b. highest possible indifference curve. c. utility-maximizing indifference curve. d. utility-equalization indifference curve.

Only at the point of consumer equilibrium does the marginal rate of substitution (MRS) equal the a. slope of the budget line. b. slope of the indifference curve. c. price ratio. d. all of the above.

At point A in Exhibit A-6, consumers would be a. spending all of their income but not maximizing total utility. b. spending all of their income and maximizing total utility. c. maximizing total utility without spending all of their income. d. none of the above.

Assume that the equilibrium price for a good is $10. If the market price is $5, a a. shortage will cause the price to remain at $5. b. surplus will cause the price to remain at $5. c. shortage will cause the price to rise toward $10. d. surplus will cause the price to rise

In an efficient market, deadweight loss is _.a. maximum. b. minimum. c. constant. d. zero.

Draw a supply and demand graph to illustrate the problem described in the case study, and prescribe your own solution. Which proposal do you think best serves the interests of small dairy farmers? Why?

Which proposal do you think best serves the interests of consumers? Why? Which proposal do you think best serves the interests of a member of Congress? Why? Q152: In recent years, school choice has been a hotly debated issue. Explain whether education is a public good. If education is not a public good, why should

Which of the following are public goods?a. Air bags b. Pencils c. Cycle helmets d. Smoking e. Contact lenses

Suppose the government imposes rent control (a price ceiling) below the equilibrium price for rental housing. Which of the following will result? a. Black markets b. The quality of existing rental housing deteriorates c. Shortages d. All of the above

If the price of a good or service increases and the total revenue received by the seller declines, is the demand for this good over this segment of the demand curve elastic or inelastic? Explain.