Using Marginal Analysis, an Economist Would Judge the Proper Size

question 75

Multiple Choice

Using marginal analysis, an economist would judge the proper size of government by comparing

• A)whether the last dollar spent on one program would have been better spent on another.
• B)whether the last dollar spent would have been better left in private hands.
• C)whether the last dollar spent garnered any value to society.
• D)the amount spent with the amount spent in the previous year.

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Definitions:

Downward-Sloping Demand

A market scenario where the quantity demanded by consumers decreases as the price of the good increases, illustrating the inverse relationship between price and demand.

Downward Sloping

Describes a line or curve on a graph that represents a decrease or decline in value as one moves from left to right.

Perfectly Competitive Firm

A perfectly competitive firm operates in a market where no single company can influence the price of its product, characterized by many sellers, homogeneous products, and free market entry and exit.

Horizontal Demand

A market situation where the demand curve is perfectly elastic, indicating that consumers are willing to purchase any quantity at a particular price.