If Larry Page, one of the cofounders of Google, spends $100,00 0 on the new Tesla electric vehicle because he has an optimistic view of the future, then: O income in the economy increases by $1,000,000, if the MPC is 0.8. O income in the economy increases by $500,000, if the MPC is 0.9. O Income in the economy increases by $400,000, if the MPC is 0.75. O income in the economy increases by $300,000, if the MPC is 0.5.

If Larry Page, one of the cofounders of Google, spends $100,00 0 on the new Tesla electric vehicle because he has an optimistic view of the future, then: O income in the economy increases by $1,000,000, if the MPC is 0.8. O income in the economy increases by $500,000, if the MPC is 0.9. O Income in the economy increases by $400,000, if the MPC is 0.75. O income in the economy increases by $300,000, if the MPC is 0.5.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 10P

See similar textbooks

Similar questions

Question 3 of 16 Income and consumption changes for five people are shown in the table. Given this information, rank the marginal propensities to consume (MPC) for the five people from largest to smallest. Largest MPC Smallest MPC Answer Bank Bert Doug Eli Carter Al Name Income change Consumption change Al +$5,000+$5,000 +$3,000+$3,000 Bert +$2,500+$2,500 +$800+$800 Carter +$1,000+$1,000 +$800+$800 Doug −$2,500−$2,500 −$1,750−$1,750 Eli −$5,000−$5,000 −$2,000−$2,000
Columns 1 through 4 of the accompanying table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C, and D are $18, $6, $4, and $24, respectively, and that Ricardo has an income of $105. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? How many dollars will Ricardo choose to save? Check your answers by substituting them into the algebraic statement of the utility‑maximizing rule. In other words, show it works when using this rule.
Income and consumption changes for five people are shown in the table. Given this information, rank the marginal propensities to consume (MPC) for the five people from largest to smallest. Largest MPC to Smallest MPC Answer Bank Colin Barry Al Dan Ernest Name Income change Consumption change Al +$10,000+$10,000 +$6,000+$6,000 Barry +$5,000+$5,000 +$1,600+$1,600 Colin +$2,000+$2,000 +$1,600+$1,600 Dan −$5,000−$5,000 −$3,500−$3,500 Ernest −$10,000−$10,000 −$4,000−$4,000
Columns 1 through 4 in the following table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C, and D are, respectively, $18, $6, $4, and $24 and that Ricardo has an income of $106. a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? b. How many dollars will Ricardo choose to save? c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule.
Autonomous consumption = R100mInvestment spending = R300mGovernment spending = R200 millionExports = R150 millionAutonomous imports = R100 millionMarginal propensity to consume =2/3Tax rate = 1/10Marginal propensity to import = 1/10Yf = R2 150 millionQ.1.1 Calculate the level of autonomous spending in this economy. (2)Q.1.2 Calculate the size of the multiplier. (3)Q.1.3 Calculate the equilibrium level of income. (2)Q.1.4 Calculate the change in government spending required to reach full employmentin the economy.
For Jones, X and Y are perfect substitutes, and he is always willing to substitute 6 units of X for 2 units of Y. The price per unit of X is $5, and the price per unit of Y is $15. Jones’s income is $60. Compute the slope of Jones’s budget line and how many units of X does Jones consume? Suppose that the price of X increases to $10, and everything else remains the same. How many units of X does Jones consume? At which price does the demand curve of X become horizontally flat?
DI=Y OUTPUT/INCOME CONSUMPTION(C) SAVINGS (S) MPC MPS APC APS 0 80 ______ ____ _____ _____ _____ 100 140 _______ _____ _____ _____ __ ____ 200 200 _______ _____ _____ _____ _____ 300 260 _______ _____ ______ ______ _____ 400 320 _______ ______ ______ ______ ______ a. Complete the following chart above b. Show graphically ( what is the equilibrium level of output)? c. Assume the following general forms of a…
Suppose that in the figure to the right, the government detemined that the amount by which the AD carve had to be shifted directly was required to generate this shif, what must be the value of the MPC? The value of the MPC assaciated with this shift is ◻ (Enter your response rounded to two decima' places) .
If you practice consumption smoothing, O you always spend less than you earn. there will be times in your life when it makes sense to borrow. O you make sure your current consumption matches your current income. O you do not save for the future.
Consumption expenditures in the U.S. usually account for approximately 40 O 50 O 60 O 70 80 percent of GDP.
Suppose you expect to earn $10 this year and $10 next year. Each dollar you earn this year can be either spent, or saved at an interest rate of 10%. If you want to spend more than $10 this year, you can borrow money at 10% interest and repay it next year. Next year, you plan to pay oyour debts (if any), then spend all your earnings and all your savings (if any). Draw your budget line between “dollars spent this year" and “dollars spent next year". Suppose the government imposes a 50% income tax on all your earnings this year and next year (not including your interest earnings). Draw your new budget line. Suppose the government imposes a 50% sales tax on everything you buy this year and next year. Draw your new budget line. Suppose the government imposes a 50% income tax on all your earnings this year and next year, including your interest earnings. Draw your new budget line. True or False: If interest earnings are not subject to income tax, then an income tax and a sales tax…
Question Another important aspect of Tourism Economics is the multiplier effect, which refers to the additional economic activity generated by tourism spending. When tourists spend money in a destination, it circulates through the local economy, benefiting not just the direct recipients of this spending but also other businesses and their employees. For example, tourists spending money in local restaurants support not only the restaurant staff but also local suppliers and their workers. The multiplier effect in Tourism Economics is essential because it: A) Reduces overall economic activity B) Only benefits the tourism sector C) Generates additional economic activity beyond the initial spending D) Leads to economic stagnation