If the Consumption Function Is Given by C = 150

question 96

Multiple Choice

If the consumption function is given by C = 150 + 0.85(Y - T) and T increases by 1 unit, then savings:

• A) decreases by 0.85 units.
• B) decreases by 0.15 units.
• C) increases by 0.15 units.
• D) increases by 0.85 units.

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Definitions:

Profit-Maximizing Rule

A principle that firms apply to determine the level of output at which they will realize the maximum possible profits.

Short-Run Monopoly

A scenario where a single supplier dominates the market for a brief period, often due to patents, resources, or technology.

Marginal Revenue

The additional income earned by selling one more unit of a product.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the total quantity produced, typically graphed to analyze cost behaviors over varying output levels.